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Alan’s Angle – The Battle of the Earnings Reports




The Microsoft and Yahoo! Q1 earnings reports represent important variables which need to be taken into consideration, so that analyzing them for a moment is definitely a must. It’s only natural that these earnings reports as well as the reactions of the two companies leave a lot of room for interpretation and, once again, we can indeed say that the week was anything but boring.

The folks over at Yahoo! do seem to have an edge thanks to their Q1 report which, let’s face it, is not bad at all. In fact, it may just represent the missing ingredient which could, why not, convince Microsoft to raise the bid. In fact, Jerry Yang’s reaction (“Our board and management team continue to be open to any and all alternatives, including a Microsoft deal”) definitely makes it clear that Yahoo! sees this Q1 report as an opportunity to obtain a far more tempting offer.

As far as Microsoft is concerned, their Q1 report wasn’t actually all that bad either, but it’s more than clear that they are as interested in Yahoo! as it gets. But exactly how much are they willing to pay? Are they willing to do whatever it takes in order to be able to at least make one step towards finally being able to threaten Google’s position as the biggest player in search?

Sure, Microsoft can afford to pay a pretty penny for Yahoo! but, as they have stated, it doesn’t mean that they will. All in all, we have a company which is in a position to hope for a more impressive offer and, on the other hand, another one which doesn’t seem all that interested in raising its bid.

In other words, we have Yahoo!, a company which is interested in selling at the right price on the one hand and Microsoft, a company which is willing to buy at the right price on the other. But what exactly is the right price? Does a right price for both parties involved actually exist?

Time will tell, but one thing is certain: if you are a person who enjoys reading between the lines, the possible Microsoft – Yahoo! scenarios will definitely keep you busy. At this point, everything is possible and, whenever we are referring to three important players such as Google (a company which should not be eliminated from the equation as far as possible scenarios are concerned), Microsoft and Yahoo!, nothing should come as a surprise.

Best wishes,

Alan Johnson