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Sat, Nov 21, 2009 - 09:02 AM EST  —  AAPL: 199.92 (-0.59, -0.29%)  |  NASDAQ: 2146.04 (-10.78, -0.5%)

Microsoft may need first-ever loan in order to buy Yahoo
Wednesday, February 06, 2008 - 05:22 PM EST

"As Yahoo waits in vain for other bidders or deal alternatives to emerge, the dissatisfaction of Microsoft investors with the Yahoo bid has reduced the value of Microsoft's offer to $29.50 a share," Henry Blodget reports for Silicon Alley Insider.

"Unless Yahoo shareholders are willing to accept a reduced offer, in other words, Microsoft could soon find itself in a sticky situation: The more Microsoft's stock drops, the more expensive the deal gets--because the company will have to reset the exchange rate to get the take-out value back to $31 a share. In so doing, it will increase dilution, leaving its existing shareholders holding a smaller percent of the combined company," Blodget reports.

"Microsoft shareholders are already unhappy with the proposal--and they're only going to get more unhappy as the deal gets more expensive. The more unhappy they get, the more the stock will drop, and the more the stock drops, the more expensive the deal will get, and so on," Blodget reports.

Full article here.

Electronista reports, "Despite its large cash reserves, the company's Chief Finance Officer Chris Liddell acknowledged that the $44.6 billion proposed deal might require that the firm borrow money and accumulate debt. While the $21 billion in reserves owned by the Windows developer would cover nearly all the cash portion of the proposed deal, a loan would help Microsoft avoid wiping out these reserves and leaving itself without options if it needs more cash in the near future, according to the executive."

Full article here.

John C. Dvorak writes for PC Magazine, "I don't think this merger would be a wise move for either company. First of all, their product lines are not very complementary. Moreover, the rationale of joining together to better compete with Google looks lame-brained, since neither company seems to have the wherewithal to do anything interesting as of yet. How do two companiesthat do not complement each other and have not shown the ability to be creative in competing with Google expect anything to change? As far as I can tell, this buyout is just throwing away the shareholders' money, and, to make matters worse, will potentially ruin both companies in the process."

MacDailyNews Take: Dvorak on his meds?

Dvorak writes, "If Yahoo! accepts this deal, it's the same as giving up and deciding to take the money and run. The principals of the company have plenty of capital and should reevaluate why they started Yahoo! in the first place. I'm certain that it wasn't so they could be bought by Microsoft and destroyed in the process. Then again, I'm sure there are a few less-moneyed individuals in the company (and on the board) who are looking to cash out rather than work for a living. It's a pathetic situation, plain and simple."

Full article here.


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Feb 06, 08 - 05:26 pm Comment from: Destroyer

MS will buy Yahoo, then bankrupt both.

Feb 06, 08 - 05:30 pm Comment from: ericdano

If it kills Microsoft, Yahoo is a good trade.

Feb 06, 08 - 05:31 pm Comment from: Google

the day I've been waiting for Microsoft admits defeat. I'm loving this way too much.

Feb 06, 08 - 05:33 pm Comment from: It's About Time

Is this a replay of the "can't miss" Time Warner/AOL fiasco? Sure hope so. How about we pass the hat - anything to get the bloated, uninovative MS and beleaguered Yahoo to merge more quickly.

Feb 06, 08 - 05:34 pm Comment from: x

first-ever loan..?? No doubt, Bill pulled that off by getting how many millions for vaporware in his early days..??

Feb 06, 08 - 05:38 pm Comment from: Petey

Go one Microsoft - BUY YAHOO and get into debt!!

Then in 5 years time Microsoft wont exist.

Brilliant move to finally kill the monoploistic mafia.

Feb 06, 08 - 05:52 pm Comment from: byronic

Microsoft has run out of ideas. The Windows cash cow is in decline, and the Office cash cow will decline along with Windows. Their only success of late has been XBox - and that required an enormous investment and has been beset by product reliability problems (and one assumes enormous warranty costs)...

Forcing people to buy your product might work for a while - but it builds resentment. Microsoft is not well-liked in most corporates - they have been too arrogant, provided terrible service, and charged too much for far too long...

This deal is enough to bring the empire crashing down. If it goes ahead it may fail spectacularly - and if that happens, the Microsoft empire will be broken up and sold off.

Perhaps in as little as 12 months after the deal goes through we could see Microsoft selling "non core assets" to get their costs down. Years of high profits have led to great inefficiencies - watch this space...

Feb 06, 08 - 05:55 pm Comment from: boulderfrog

Gates chair isn't even cold yet and monkey boy is throwing it out the window.

Feb 06, 08 - 05:57 pm Comment from: jjcale

OK, Steve B. is mad but he isn't stupid. The U$ has no value anymore, so the best thing you can do is to buy companies.

However, Steve B. is going to buy the wrong companies.

Feb 06, 08 - 05:57 pm Comment from: Tommy Boy

@It's About Time: The AOL-Time Warner merger was a fantastic deal for the AOL shareholders who bought Time Warner. It was a horrible deal for the Time Warner shareholders who sold the company.

Feb 06, 08 - 05:59 pm Comment from: Uh Oh

The way apple stock performing lately leads me to believe some on this board may be needing a loan as well.

Feb 06, 08 - 06:00 pm Comment from: boyweho

Maybe Microsoft can get a loan or grant from the Gates Foundation?

Feb 06, 08 - 06:01 pm Comment from: Jack

I'll lend, what the hell, give some of my feces. They can use it as pigment in some of thier products.

Feb 06, 08 - 06:02 pm Comment from: Quaid

Tell MS to fark off. Yahoo, you have the power. Rip their balls out.

Feb 06, 08 - 06:03 pm Comment from: Tommy Boy

@ byronic: Huh? How is the Xbox in any way, shape, or form a success? The division within Microsoft that parents the Xbox has lost over $5bn! An additional $1-2 bn was set aside to cover repairs of the Xbox 360 over the current fiscal year. Without those massive Xbox related losses Microsoft wouldn't be looking at taking out a loan in order to cover the Yahoo acquisition.

Feb 06, 08 - 06:06 pm Comment from: MrScrith

it would be so beautiful and ironic if Microsoft, the Goliath of the computer world, was the maker of it's own demise! I would laugh!

Feb 06, 08 - 06:12 pm Comment from: 84 Mac Guy

This is going to be so, so much fun to watch.

- Microsoft going into debt to purchase Yahoo.
- Microsoft struggling to figure out how to integrate the 2 companies.
- Creative people at Yahoo leaving because they don't want to work for monkey boy.
- Microsoft distracted from improving its cash cow Windows.
- Microsoft not having cash when it needs it for something important.
- Microsoft/Yahoo slowing fading away into the American corporate sunset.

I can see Steve Jobs and Eric Schmidt sitting in the grandstand passing popcorn back and forth while they watch Microsoft destroy not one, but two companies.

If this deal goes through save your Microsoft memorabilia because it will be valuable someday.

Feb 06, 08 - 06:15 pm Comment from: shen

"John C. Dvorak writes for PC Magazine, "I don't think this merger would be a wise move for either company. First of all, their product lines are not very complementary. Moreover, the rationale of joining together to better compete with Google looks lame-brained, since neither company seems to have the wherewithal to do anything interesting as of yet. How do two companies that do not complement each other and have not shown the ability to be creative in competing with Google expect anything to change?"

to be creative in competing with Google? why the extra words?

"How do two companies that do not complement each other and have not shown the ability to be creative." full stop.

Feb 06, 08 - 06:22 pm Comment from: HolyMackerel

Expect the cost of Windows, Office and XBox to rise to pay for this.

If this goes ahead, Apple will have more cash on hand than MS!

Feb 06, 08 - 06:28 pm Comment from: Sixvodkas

I heard rumour that if MS pulls this off, they're to pay with Monopoly Money.

Feb 06, 08 - 06:35 pm Comment from: HolyMackerel

"Instant Messaging. Yahoo! and MSN are dominant, and the real competitor is Skype, not GoogleTalk. Rumor has it that Google is going to buy Skype from eBay at a bargain price."

I wish Apple would buy Skype and merge it into the iPod Touch and iChat. When away from WiFi your calls go to visual voicemail.

Keep the iPhone for cellular calls.

Feb 06, 08 - 06:36 pm Comment from: mactivist

IBM will have the last laugh: Windows 7 to be re-branded OS/7 Warp after the fire sale.

Feb 06, 08 - 06:46 pm Comment from: Mac-nugget

How about some REAL Mac news. This site is a joke. Quicktime gets updated and not even a comment. Acrobat gets updated and again no news. But but we sure get our share of how bad Vista is. I thought this was Mac Daily News. Apparently the News part is only a moniker.

Feb 06, 08 - 06:47 pm Comment from: macromancer

"The way apple stock performing lately leads me to believe some on this board may be needing a loan as well"

Um, yeah, that made NO sense.

Feb 06, 08 - 07:10 pm Comment from: Drunk Cheney

1. Microsoft buys Yahoo - goes into debt

2. Both Yahoo and Microsoft continue to lose money

3. Microsoft declares bankruptcy - sell assets

4. Apple buys the Office Suite from MS and Kills the PC version

5. Windows downsizes to only sell Windows - next release is postponed indefinitely

6. The world rejoices

7. Down side - thousands of MS employees are unemployed and now on the street - possibly knocking on Apple's door

Feb 06, 08 - 07:11 pm Comment from: Jay-Z

@ Mac-nugget:

Take a look at yesterday's iPhoto and ProKit update threads. How many comments are there? That's an indication of where the interest lies. If you're looking for software update information, the first place you should look is ... drumroll please ... Software Update.

Many of us enjoy rubbernecking the highway accident that is Microsoft. This is a place we can do that. You can either ignore the opinions or go elsewhere. Most Apple rumors sites post the same information within minutes of one another.

Feb 06, 08 - 07:12 pm Comment from: Big Al

@ Dvorak,

Even a coin gives head 50% of the time.

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Feb 06, 08 - 07:32 pm Comment from: Uh Oh

119 in After Hours, folks. Dropping faster than Bill Clinton's pants at all female page white house party.

Feb 06, 08 - 07:33 pm Comment from: bioness

Oh dear, as soon as the keyword loan was mentioned, Mrs Springrose and other google search spammers walked in to post something totally stupid....

MDN try re-wording the article

Feb 06, 08 - 07:36 pm Comment from: BenchMarkMan

2MB MacBook Pro vs 2MB MacBook Air SSD

What $3000 MBA gets you vs MBP + AppleCare for $3000

Performance: Xbench MBA %

CPU 87% (MBA slower)
Thread 60%
Memory 100% (both same)
Quartz 75% (MBA slower)
OpenGL 14% (WOW! Crawling vs MBP)
User Interface 38% (wow! Slow vs MBP)
Disk Test: not accurate due to data on drives.

Conclusion: MBA Open GL sucks bad. If your program has a option to turn off Open Gl, use it. The integrated graphics is most likely responsible.

Feb 06, 08 - 07:51 pm Comment from: Ampar

It's better to leave them alone than leave them a loan.

Feb 06, 08 - 08:07 pm Comment from: KenC

While, MS would probably borrow, thru some form of short-term debt, perhaps commercial paper, it would not make a significant difference, as MS throws off 10s of Billions of dollars a year. They'd quickly be able to pay it off.

I think this is a bad deal for MS not because the price is too high or that Y! is a bad company, it's just that a company of Y!'s size is hard to ingest.

Feb 06, 08 - 08:15 pm Comment from: Not BenchMarkMan

Um, what does your post have to do with this article?

Answer: Nothing

Have you played with a MacBook Air yet? Unlike you, I have. It's surprisingly fast. Is it meant to compete against the MacBook Pro?

No, you idiot. The two Macs have completely different purposes. If you need a full-service laptop, get a MacBook Pro. It's wonderful. But if you're a road warrior who spends more time in the air than on the ground, and you're sick of having a 40 lb bag on your shoulder as you race through DFW to catch a connecting flight, the MacBook Air is perfect for you.

Obviously, you're not a woman. You're a dweeb who thinks that benchmarks are all you need to know about a computer. But if you talk with a number of women on the MacBook Air, you'll get a completely different response. They WANT one. Now.

To sum up: the MacBook Air wasn't designed for you. But you are too dense to comprehend that. Get a life. Please.

Oh, and yes, Microsoft, be our guests. Go ahead and deworsify your business. Buy an over-priced moneyloser like Yahoo and run it into the ground. Go ahead and blow through all your cash. It is the kind of boneheaded, alpha male decisions people like Ballmer ("I've been waiting for over 20 years to finally run the company MY way, and damnit, I will!") do when they have no vision. So go for it, monkeyboy. It's a brilliant move.

Or, you could do what Apple did when things got tight: they invented their way out of it. That's what great companies do. But Microsoft doesn't invent. Instead, all monkeyboy can think of is using Yahoo as part of his scheme to "embrace and extend" the World Wide Web, and force the world to ascribe to proprietary Windows standards.

If you had to ask me one reason why Apple must exist, I couldn't think of a better reason.

Feb 06, 08 - 08:20 pm Comment from: The Rev.

What ever. I don't use either.

Feb 06, 08 - 08:55 pm Comment from: Dvorak

See! For once I'm right, fanboys!

Feb 06, 08 - 09:17 pm Comment from: Ray

Ballmer will gladly pay next Tuesday for Yahoo today.

Just my $0.02

Feb 06, 08 - 09:21 pm Comment from: HMCIV

@ Big Al

Don't you EVER make that kind of reference regarding Dvorak again. I think I have to cauterize my eyeballs now.

Feb 06, 08 - 09:35 pm Comment from: Lurker_PC

Ampar - very clever.

Peace.

Feb 06, 08 - 09:46 pm Comment from: Spark

"While the $21 billion in reserves owned by the Windows developer would cover nearly all the cash portion of the proposed deal,...."

Windows developer? That would be Apple, right? Microsoft could be called the Mac OS 'renamer'.

Feb 06, 08 - 09:47 pm Comment from: Ampar

Lurker_PC: grin

Feb 06, 08 - 10:02 pm Comment from: deep debt

Ballmer will borrow whatever it takes to buy Yahoo.

Hopefully the terms are adjustable-rate, introductory interest-only.

Imagine the chairs flung when this baby resets. smile

Feb 06, 08 - 10:04 pm Comment from: The Other Steve

Why was MDN criticizing Dvorak? I agree with him.

- washing my mouth out with soap now.

Feb 06, 08 - 10:19 pm Comment from: easy money

While, MS would probably borrow, thru some form of short-term debt, perhaps commercial paper, it would not make a significant difference, as MS throws off 10s of Billions of dollars a year. They'd quickly be able to pay it off.

... assuming the Yahoo deal doesn't turn into a massive money & management black hole. Buying Yahoo is the easy part.

Also remember that the Yahoo takeover would be happening right as MS sends itself on another frantic death march, aka Windows 7. Something will have to pay for that venture.

Methinks that once Ballmer gets a taste of borrowed money, he won't be able to stop.

Feb 06, 08 - 11:09 pm Comment from: studentrights

You know your going down when you have to barrow (lend) money to keep your company (campaign) afloat.

Microsoft isn't the only one's looking so 90s these days.

Feb 06, 08 - 11:28 pm Comment from: Alex

Anyone else remember when Time Warner bought Atari? It went remarkably similar to their AOL merger and I suspect the same will happen with MS/Yahoo!.

Feb 06, 08 - 11:35 pm Comment from: Mittens Romney

Do it and kill Microsoft! wink

Feb 06, 08 - 11:40 pm Comment from: Name

I hope this deal happens. It won't kill Microsoft, but it will hurt Microsoft very badly. Oh, how I hope this deal happens.

Feb 07, 08 - 12:24 am Comment from: Missy Pants

@Sixvodkas
"I heard rumour that if MS pulls this off, they're to pay with Monopoly Money."
Close, but the real story is Gates and Ballsmer heard about the Canadian dollar rate. But they accidentally bought Canadian TIRE dollars, and don't know they now only have a penny on each dollar.
I told them "Go to a bank, NOT a hardware store!"
But did they listen?
"No!", they said. "Look at all the pink and green bills our U.S. dollars are buying!", they said.
The rest is history.

Feb 07, 08 - 12:34 am Comment from: John C. Randolph

I agree with ericdano. If it takes losing Yahoo to do microsoft in, I can live with that. Sucks for Yahoo employees and shareholders, though.

-jcr

Feb 07, 08 - 12:36 am Comment from: Jubei

While I would love to revel with these glorious postings of MS making a huge mistake and going bankrupt, such a thing will never happen. Remember this is a company who is allowed to continue operating as a Monopoly within the industry. Money will never be an issue with them. It's guaranteed profits quarter after quarter after quarter.

MS can easily afford to squander a few billion here and there consistently for as long as they are allowed to operate as a monopoly.

Sad to say, but very true.

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