Tech Trader: What Would Softie do?

"Kara Swisher raises a good question: What will Microsoft (MSFT) do if Yahoo (YHOO) reports rotten Q1 results? And there is reason to be worried. Thanks to MSFT’s pending $31-a-share bid, YHOO shares have largely been sheltered from the ugly slide suffered by Google (GOOG) shares in recent weeks. In fact, since Microsoft made its offer, Google has dropped 21% - at least part of that concern about a weakening online ad environment. Had that happened to YHOO - and if MSFT had not come along - Yahoo shares could now be at $15 and change. Remember that Yahoo is operating in the same softening advertising environment as Google - and in fact, its results could also be hurt by customer confusion about the potential impact from the takeover bid.
Henry Blodget today lays out a scenario where Yahoo reports a stinker, Microsoft pulls its offer, the stock drops 40%, and then MSFT comes back with a new offer - at $25."

Burnham: Microsoft/Yahoo: A Bad Deal For Silicon Valley: Take II

"That said, I still think that Microsoft's acquisition of Yahoo is still a net negative from an M&A perspective. Yes, it's certainly not the end of the world, but on the whole and on the average it's never a positive thing to have an active, well endowed, acquirer removed from the mix. Yahoo may not have been buying 50 start-ups a year, but they were still one of the most active Internet acquirers not just in terms of deals, but also in terms of bids. Indeed the most important party in any deal is not the actual buyer but the second place bidder and Yahoo had seemed to make a career out of being the second place bidder lately. Finally, thanks to its huge market capital, massive traffic and strong (although not relative to Google) monetization platform, Yahoo is one of the few Internet acquirers who have the luxury of being able to easily drop $50-$100M on a "feature" without really thinking about it. I totally agree with Mark that if you are building a "feature" with the intent of getting acquired by Yahoo or whoever, you were likely doomed to failure a long time ago, but at same time, the cynic in me has seen a lot of "features" get funded in the valley over the past two years often under the assumption that if they get enough eyeballs one of the big three M&A fairies will swoop in and drop $100M just to "keep up with the Joneses"."

Tech Startups 3.0: Yahoo: Tellme's tale as Microsoft subsidiary

"Mike McCue hasn't talked to Yahoo Inc. co-founder Jerry Yang since Microsoft Corp. ambushed the Internet pioneer with an unsolicited takeover bid a month ago.

But McCue would like his old friend to know that becoming a Silicon Valley subsidiary of the world's largest software maker can work out well.

Becoming a cog in a corporate machine isn't something McCue had in mind during the eight years that he spent building Tellme, which makes the technology behind directory assistance and other voice-controlled services. It ranks as Microsoft's largest Silicon Valley acquisition so far."