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January 3, 2006

Microsoft to acquire Yahoo? Or someone else?

Posted by David Hunter at 10:42 PM ET.

Sally Hofmeister has been getting a lot of mileage today with her Sunday LA Times article. First, the computer press was buzzing over her speculation that Google might introduce it’s own non-Windows PC at CES. Now the part of the story involving Yahoo and Microsoft:

Within days, speculation was rampant that Microsoft, determined to keep itself in the game, had offered to buy Yahoo Inc. for $80 billion. If rumors were to be believed, the Microsoft bid — a premium of more than 30% over the Web giant’s current market value — was rejected by Yahoo as too low.

Will Microsoft spend $90 billion or more to buy Yahoo or, alternatively, AOL parent Time Warner? Maybe not, especially when the software giant could buy Barry Diller’s IAC/InterActiveCorp at a fraction of the price. If owned by Microsoft, Diller’s collection of websites such as Ask Jeeves, Expedia,, LendingTree and Ticketmaster could help drive traffic to MSN.

has Wall Street excited:

Many option investors are betting on more gains in the shares of Web media company Yahoo Inc. amid speculation of a tie-up with Microsoft Corp. and high hopes for continued growth in Web advertising.

Shares of Yahoo gained 4.4 percent to close at $40.91 on the Nasdaq amid a broad market rally.

Investors have been piling into January Yahoo calls, mostly notably the contracts that give them the right to buy the stock at $40 and $42.50 a share within the next several weeks.

On Tuesday, a combined total of 103,673 Yahoo options traded in the U.S. options market — dominated by more than 81,000 calls, more than its normal volume of 35,449 contracts, according to market research firm Track Data.

Right now Yahoo’s market cap is $58 billion.

Filed under Acquisitions, Coopetition, Yahoo

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2 Responses to “Microsoft to acquire Yahoo? Or someone else?”

  1. Microsoft News Tracker » Microsoft and Yahoo talk search Says:

    [...] It’s not as exciting as the rumor that Microsoft had made an offer to acquire Yahoo that was later denied by Steve Ballmer, but Darryl K. Taft reports at eWeek that the two are huddling over search: Harry Shum, the Beijing-based managing director of Microsoft Research Asia, said he has recently spoken with the head of Yahoo Research about the issue of enhancing search capabilities and competing with Google. … “I just talked to the head of Yahoo research in California,” Shum told eWEEK in an interview. “He was saying he can really appreciate how difficult it is to do technology transfers, and especially this large number of technology transfers that we have done.” [...]

  2. Hello World » Blog Archive » MS Yahoo Live Says:

    [...] This rumor has been around before. It seems to be a tad more real this time – see NYPost article and SearchEngineWatch post for more sources, references and names. [...]

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