Yahoo Buys Time for the Inevitable – Too Bad !!!! News Corp Dropped Out

Implications: Yahoo’s actions are standard operating procedure.

Analysis: I think it’s a foregone conclusion; Microsoft will be acquiring Yahoo unless Yahoo does something incredibly stupid.

It is no secret that Yahoo shareholders want a deal.  There is a limit to how long Yang can hold off Microsoft before his shareholders boot him out the door for not taking the deal.  Yang’s need to retain independence does not necessarily have anything to do with creating shareholder value.

The Yahoo shareholder does not care about Yahoo management independence.  Retaining independence is a management need for keeping their jobs.

It’s too bad for Yahoo that News Corp backed out.  A merger between the News Corp and Yahoo had more strategic value than a merger between Microsoft and Yahoo.  News Corp is in the content business.  Yahoo had distribution in the Internet.  A natural fit.

Microsoft has had modest success in the Internet.  It is true Yahoo is a distant Number 2 to Google but it is still farther ahead than Microsoft.

However, that all being said I can understand News Corp’s desire not to get into a bidding war.  News Corp is definitely positioned for success.

The stock will certainly rise; but that is a short term gain.  I am not sure Yahoo will benefit (in the long run) with Microsoft leading the charge.