Microsoft Comes Clean

The drawn out saga over a Microsoft/Yahoo! deal is mercifully over, and Microsoft is even fessing up to the worst kept secret on Wall Street. Yes, they have been talking to Yahoo! for over a year about a possible combination:

In late 2006 and early 2007, we jointly explored a broad range of ways in which our two companies might work together. These discussions were based on a vision that the online businesses of Microsoft and Yahoo! should be aligned in some way to create a more effective competitor in the online marketplace. We discussed a number of alternatives ranging from commercial partnerships to a merger proposal, which you rejected. Microsoft Letter To Yahoo!

Yahoo!’s stock traded suspiciously in the Thanksgiving week of 2006 when executives interrupted their holiday plans to try to finalize a deal; they were at loggerheads and the selloff in Yahoo! the day after Thanksgiving in 2006 was swift.

The rumor mill was strangely silent going into this deal; funny how that worked out. Buying Yahoo!’s stock yesterday would have been more lucky than good, the best trade in this stock in recent memory was probably fading the hype over the AliBaba.com deal. You would still have four or five points in the trade if you would not have covered.

All eyes are on Eric Jackson now; his grassroots campaign over all things Yahoo! has been fascinating to follow. And we would tend to agree with him about this statement, uttered just a few days ago;

“I honestly believe that Jerry Yang and David Filo have no interest in selling the company,” he said Eric Jackson

Eric will likely soon speak his mind, and we will keep an eye on him as he prepares to launch a small activist hedge fund called Ironfire Capital.

Integration issues are likely to weigh on Microsoft in the months ahead; this is going to be messy. Bye Bye Yahoo!, you will never be the same, and we are going to miss you. Assuming Jerry cooperates. Of course, when there is a gun pointed at you, you usually cooperate.

“It is a shotgun marriage, but the person holding the gun is Google.” --Tim Webbers, BBC Business Editor

Eric Jackson’s Breakout Performance
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The content contained represent the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.

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