Posted April 14, 2008 5:07 pm by with 4 comments

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If the Yahoo/Microsoft deal is to going happen at all, analysts think that it’ll happen this week, according to CNET. Despite having rejected the initial offer long ago, Yahoo is still feeling the pressure for several reasons. Two deadlines are looming for Yahoo: Q1 reporting and Microsoft’s latest ultimatum deadline.

Yahoo’s Q1 2008 reports are due out on the 22nd (next Tuesday), and analysts don’t expect much from them. Thomson Financial says that the Wall Street consensus is $1.33B in revenue, or 9¢ net income per share. (Compare this to their Q4 2007 numbers of $1.8B in revenue and 19¢ net income per share.) A disappointing Q1 could be a sign that Yahoo was “distracted” by Microsoft’s offer, as Derek Brown of Cantor Fitzgerald told CNET, but it could also be a sign of the company’s failing confidence.

Additional pressure comes from Microsoft’s three-week deadline imposed in a letter written on April 5. Yahoo’s initial response was to blame their hesitance on the fact that the deal will face FCC scrutiny (need we remind you that Google/DoubleClick spent 8 months before the FCC?). Analysts talking to CNET put the likelihood of FCC opposition, however, at 15-25%. With the deadline looming for next Saturday (four days after their Q1 reports are due), Yahoo is sure to have a lot on its mind.

Potentially most devastating of all, a poor Q1 could lead to a lower offer from Microsoft. In fact, Reuters cites unnamed sources that say that Microsoft’s bid will turn hostile—and lower—after the ultimatum deadline next Saturday, with the offer dropping from $44.6B to $42.4B.

Yahoo’s board convened Friday, but didn’t come to any decisions on mergers with Microsoft, AOL, News Corp or anyone else. Things are quickly growing dimmer for Yahoo. What path do you think they should (or will) take?

  • And the Microhoo saga continues. Yahoo is embattled, and shareholders are grumpy with management for holding out against the offer. They are not happy with the fact that their share value may get diluted more and methinks a deal is imminent.

  • Interesting. I feel that the possibility of Google and Yahoo combination is more likely.

  • I think Yahoo! should push for a more equal merger with Apple. Both Apple and Yahoo! are essentially media companies and would enjoy many synergies from such a marriage. Plus, Apple and Yahoo! would much more cool than Microsoft and Yahoo!

  • Don’t let it end this week. We need more soap opera entertainment. Let it at least last until the fall when summer reruns are over.

    I’m still hoping Yahoo can remain independent.

    Steven Bradley’s last blog post..How Does $25,000 In Prizes Sound?