Yahoo Swings and Misses! Microsoft Unlikely to Increase Bid

According to AP and Reuters, Yahoo has turned in an operating performance basically flat from previous years. Although the company reported tripled profits, most of the revenue was a result of the
purchase of Alibaba. The lukewarm results are unlikely to provide a tipping point in Microsoft’s takeover offer of the company forcing an increase in the price bid for Yahoo. If Yahoo’s results had been better, perhaps shareholders could have forced an improved offer. Unfortunately, the Yahoo business plan has not been fruitful.

Yahoo cites weakness in the economy and demand for advertising as the cause of the flat results. Saturday is the Ballmer imposed deadline for a positive Yahoo response to Microsoft demands for a takeover. After that date, Ballmer vowed to go hostile in the takeover. That proxy fight will result in additional acquisition
costs and time to devise strategy – all of which will distract Microsoft in what is probably its most challenging era. The Vista operating system is a consumer disappointment. Gamers are avoiding the OS as the overheaddegrades frames per second. Microsoft needs to focus on operations.

Reuters managed to get a quote from Ballmer, who in Morocco, who said that the Yahoo results don’t affect the value of Yahoo to Microsoft.

No increase in price.

The cultures of the two companies could not be more different. I just don’t know if a single company will arise from the acquisition or if it will be a Frankenstein.