Chart from Yahoo Finance
It seems that shareholders don't think a Yahoo takeover is a good idea. Even though Microsoft just reported some outstanding financial results, its share price is taking a beating. As has been pointed out, this reduces the value of the bid, which is half cash-half shares.
Amusingly enough, this decline is hitting two of Microsoft's biggest shareholders -- Steve Ballmer and Bill Gates -- where it hurts.
Considering that Silicon Valley hates foreigners from the far north (Seattle? They're worse than Canadians) and Microsoft is also taking a beating in the press, this might be a good time to pull out. Before it gets worse.
Update: Or maybe not. As fred2 points out in a comment below: "Microsoft, Apple and Red Hat all fell on 1 February and have fallen since, and at an almost identical rate. The North American stock markets are all tanking at the moment, so how much can be read into this?" See here....
Charles Arthur adds: the MSFTextrememakeover blog, which is pushing for downsizing, has some in-depth financial analysis of the proposed deal, with the coda:
So at some future point, MSFT is going to have to take a huge charge to write down the "goodwill" difference between what they paid, versus what YHOO was actually worth. I guesstimate that that charge will be at least $1/share, and it could easily be $2 or more depending on what the final price is, how the integration goes, etc.. Needless to say, a $1-2 charge in some future fiscal will have the effect of wiping out a large part of MSFT's overall earnings for that entire year.
if you're a MSFT shareholder you should be hoping this deal gets kiboshed by either YHOO or regulators (however unlikely). Alternatively, you should hope that MSFT and YHOO come to some other accommodation. The best option there would be a standalone entity (either under the YHOO listing or a new one), into which both YHOO and MSFT contribute and MSFT shareholders get stock.
(To the latter suggestion, I'd just point out that almost all joint ventures fail. I can only think of one in the past decade that's worked well: Sony Ericsson.)
