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Another Brilliant Scoble Linkbait: This Time on MSFT/YHOO/GOOG

Posted by Bob Warfield on May 5, 2008

I always enjoy Scoble’s linkbaiting.  It has to be one of the reasons he is a premier blogger about town. 

His latest purports to show that both Google (obvious) and Yahoo (What?!?!) are the winners and Microsoft is the loser.  His evidence?  A chart of stock prices since the deal was announced showing the performance of the three stocks.

Not so fast, though Scoble.  Of cources Google is up, but Microsoft and Yahoo are where they are on that chart for the same reason that Yahoo hasn’t crashed all the way back down to the $21 a share many investors say it’s worth absent Microsoft.  “And why is that?” you may ask.  Because a reasonably large contingent of investors are still betting that Microsoft will be back after shareholders soften up Yahoo management a bit.

I don’t think so.  As I pointed out in my original post, I think Ballmer and Co were hurt by how hard Yang and Yahooligans fought to avoid the embrace.  Ballmer extended what he saw as a generous offer and got back panicky scorched earth.  I mean come on, where’s the love in that?

I’m not the only one on that kick.  Henry Blodget says something strikingly similar:

Is Microsoft’s bid withdrawal just another bluff? It’s possible. Steve’s a card player, and he and his advisors probably foresaw the shareholder storm that is now walloping Yahoo–as well as the chance that this storm could be so intense that it could force Yahoo into a deal.

That said, we don’t think that’s why Ballmer walked. We think he walked because:

  1. His ceiling really was $34-ish, and it probably seemed that Yahoo just wasn’t going to get there.
  2. His enthusiasm for the deal had waned over the past two months–as many of his own shareholders, Yahoo management, and the press peed all over the combination.

In short, we think Steve walked because he just wasn’t that eager to do the deal anymore. And given Yahoo’s position since the bid was announced, we don’t blame him.

When the world figures out Microsoft isn’t coming back, or at least not at anything like that $33 offer, gravity will prevail and Scoble’s stock chart will look different.  Microsoft investors who think the deal was a mistake can heave a sigh of relief and raise that stock, and Yahoo will regress to where it had been, or worse.  Meanwhile, the one sure thing is that Google is likely to continue its rise.

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Henning Kagerman says Ballmer should’ve upped his bid to get Yahoo.  That’s pretty rich.  When was the last time SAP offered a 70% premium for a company they wanted to acquire?  What would Kagerman’s response have been, I wonder, if his generous 70% offer had been spurned?

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