How low can Yahoo stock go now that Microsoft has formally withdrawn their bid to acquire Yahoo? Thus far, Yahoo stock is down to $23.90, a drop of about 16% and the day has just started. Here Jerry Yang, Yahoo’s CEO was adamant that they were worth $37 per share! He’ll certainly be in the hot seat today when he comes strolling in the door to work and has to answer to all of his employees who are still in shock that Yahoo didn’t accept Microsoft’s upped offer.
Wait a second, I guess we should back-up and go-over what happened between Friday and today. On Friday, Microsoft at the very last minute decided to up their bid to offer Yahoo $33 per share, or another $5 billion dollars. On Saturday, Yang flew to Seattle with Yahoo’s other co-founder David Filo to talk to Ballmer. They were going there to tell him in person that they wouldn’t accept anything less than $37 dollars per share. You would have thought that at a face-to-face meeting like that, they would have been able to negotiate something but they didn’t. Shortly thereafter, Microsoft withdrew their bid.
Lots of Yahoo employees have stock-options, so they were clearly invested into the happenings between the two companies. Kara Swisher interviewed about a dozen Yahoo execs over the weekend to try and get an idea of where they stand and how they feel, and her article titled “I Need Some Prozac” explains it all. One exec who chose not to be identified said, “Having to face my staff tomorrow will not be so much fun and I need some Prozac, since I don’t know what I can say to them about how our leadership is going to get our company going again.”
So now what happens from here? Well, Yahoo stock will likely continue to tumble unless they act quick and try to make some last-ditch efforts to save their stock like partnering with Google or merging with AOL. If it continues to tumble and Yang isn’t able to prove that Yahoo is worth at least $37 per share, we could see Microsoft come marching back to Yahoo with a much lower offer. Yahoo would almost be forced to accept it with the backlash they received from rejecting a Microsoft offer previously, fresh in their minds.
Did Jerry Yang just make the biggest mistake of his career and will this ultimately lead to his replacement as Yahoo CEO? He’s doing his best to smooth things over right now and posted a blog titled “Ok, so now what?” In it he says, “We’ve emerged a stronger, more focused company with an even greater sense of purpose.” Unfortunately, at this point they haven’t emerged stronger and some are predicting it’s all downhill from here.
Note: If you’d like a great re-cap of what happened over the last several months, take a look at Paul Thurrott’s article titled “What might have been: A look back at Microsoft/Yahoo! coverage in WinInfo.” It’s really interesting to go back and see how all of this unraveled.
Thanks to all who sent in tips!