Microsoft may need first-ever loan in order to buy Yahoo

“As Yahoo waits in vain for other bidders or deal alternatives to emerge, the dissatisfaction of Microsoft investors with the Yahoo bid has reduced the value of Microsoft’s offer to $29.50 a share,” Henry Blodget reports for Silicon Alley Insider.

“Unless Yahoo shareholders are willing to accept a reduced offer, in other words, Microsoft could soon find itself in a sticky situation: The more Microsoft’s stock drops, the more expensive the deal gets–because the company will have to reset the exchange rate to get the take-out value back to $31 a share. In so doing, it will increase dilution, leaving its existing shareholders holding a smaller percent of the combined company,” Blodget reports.

“Microsoft shareholders are already unhappy with the proposal–and they’re only going to get more unhappy as the deal gets more expensive. The more unhappy they get, the more the stock will drop, and the more the stock drops, the more expensive the deal will get, and so on,” Blodget reports.

Full article here.

Electronista reports, “Despite its large cash reserves, the company’s Chief Finance Officer Chris Liddell acknowledged that the $44.6 billion proposed deal might require that the firm borrow money and accumulate debt. While the $21 billion in reserves owned by the Windows developer would cover nearly all the cash portion of the proposed deal, a loan would help Microsoft avoid wiping out these reserves and leaving itself without options if it needs more cash in the near future, according to the executive.”

Full article here.

John C. Dvorak writes for PC Magazine, “I don’t think this merger would be a wise move for either company. First of all, their product lines are not very complementary. Moreover, the rationale of joining together to better compete with Google looks lame-brained, since neither company seems to have the wherewithal to do anything interesting as of yet. How do two companiesthat do not complement each other and have not shown the ability to be creative in competing with Google expect anything to change? As far as I can tell, this buyout is just throwing away the shareholders’ money, and, to make matters worse, will potentially ruin both companies in the process.”

MacDailyNews Take: Dvorak on his meds?

Dvorak writes, “If Yahoo! accepts this deal, it’s the same as giving up and deciding to take the money and run. The principals of the company have plenty of capital and should reevaluate why they started Yahoo! in the first place. I’m certain that it wasn’t so they could be bought by Microsoft and destroyed in the process. Then again, I’m sure there are a few less-moneyed individuals in the company (and on the board) who are looking to cash out rather than work for a living. It’s a pathetic situation, plain and simple.”

Full article here.

67 Comments

  1. This is going to be so, so much fun to watch.

    – Microsoft going into debt to purchase Yahoo.
    – Microsoft struggling to figure out how to integrate the 2 companies.
    – Creative people at Yahoo leaving because they don’t want to work for monkey boy.
    – Microsoft distracted from improving its cash cow Windows.
    – Microsoft not having cash when it needs it for something important.
    – Microsoft/Yahoo slowing fading away into the American corporate sunset.

    I can see Steve Jobs and Eric Schmidt sitting in the grandstand passing popcorn back and forth while they watch Microsoft destroy not one, but two companies.

    If this deal goes through save your Microsoft memorabilia because it will be valuable someday.

  2. “John C. Dvorak writes for PC Magazine, “I don’t think this merger would be a wise move for either company. First of all, their product lines are not very complementary. Moreover, the rationale of joining together to better compete with Google looks lame-brained, since neither company seems to have the wherewithal to do anything interesting as of yet. How do two companies that do not complement each other and have not shown the ability to be creative in competing with Google expect anything to change?”

    to be creative in competing with Google? why the extra words?

    “How do two companies that do not complement each other and have not shown the ability to be creative.” full stop.

  3. “Instant Messaging. Yahoo! and MSN are dominant, and the real competitor is Skype, not GoogleTalk. Rumor has it that Google is going to buy Skype from eBay at a bargain price.”

    I wish Apple would buy Skype and merge it into the iPod Touch and iChat. When away from WiFi your calls go to visual voicemail.

    Keep the iPhone for cellular calls.

  4. How about some REAL Mac news. This site is a joke. Quicktime gets updated and not even a comment. Acrobat gets updated and again no news. But but we sure get our share of how bad Vista is. I thought this was Mac Daily News. Apparently the News part is only a moniker.

  5. 1. Microsoft buys Yahoo – goes into debt

    2. Both Yahoo and Microsoft continue to lose money

    3. Microsoft declares bankruptcy – sell assets

    4. Apple buys the Office Suite from MS and Kills the PC version

    5. Windows downsizes to only sell Windows – next release is postponed indefinitely

    6. The world rejoices

    7. Down side – thousands of MS employees are unemployed and now on the street – possibly knocking on Apple’s door

  6. @ Mac-nugget:

    Take a look at yesterday’s iPhoto and ProKit update threads. How many comments are there? That’s an indication of where the interest lies. If you’re looking for software update information, the first place you should look is … drumroll please … Software Update.

    Many of us enjoy rubbernecking the highway accident that is Microsoft. This is a place we can do that. You can either ignore the opinions or go elsewhere. Most Apple rumors sites post the same information within minutes of one another.

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