Silence reigns on Microsoft/Yahoo deal (for good reason)

Three days have passed and as of this blog posting, there have been no significant announcements from either party about the next steps in Microsoft's possible acquisition of Yahoo. But a story posted today in the New York Times offers a great reason for the silence. Should Microsoft walk away from the deal (or appear to do so), Wall Street analysts predict that Yahoo's share price would drop. That would further weaken the company to fend off a hostile attack by Microsoft.

If you held a bunch of Yahoo stock, would you be willing to vote for a new Microsoft-controlled board and cash out? Or would you want to hold onto it while Google more-or-less consumed the market with Microsoft battling ruthlessly with Google?

There was a time in the way distant past (by IT standards) when Yahoo was the giant. It was the face of the Internet in the bubble era, with its stock trading at over $100/share. (Yahoo was the "Internet" in movies such as Bruce Almighty, circa 2003 ... remember?)

Does Yahoo's board, lead by co-founder Jerry Yang, remain stuck in its glorious days of past? If that's the case, then Microsoft's silence is merely the prelude before swooping in for the kill. Or will Yahoo really fend off the largest software company in the world -- one that is not used to hearing "no" for an answer. Many people (probably not stockholders) can't help but root for the underdog.

Now, the history lesson ... by now you must have heard that on Feb. 1, Microsoft offered Yahoo a bid, originally valued at $44.6 billion, or $31 a share and shortly thereafter Yahoo's CEO declared that bid too low. Microsoft had set a deadline of Saturday for the bid to be accepted and had made rumblings that it might initiate a hostile take-over should Yahoo refuse. At the same time, Microsoft also gave hints that it might just drop the whole thing and try to grow its online advertising business organically, or through another, not-yet-indicated acquisition target.

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