Daily Archives: April 5, 2008

Microsoft Adds Pressure to Yang & Yahoo! Board (MSFT, YHOO)

Yesterday we noted that Microsoft (NASDAQ: MSFT) may be close to either lowering its bid or taking other actions in its attempt to acquire Yahoo! (NASDAQ: YHOO).  Now the facts are out.  Steve Ballmer sent a letter to the Yahoo! board of directors and discussed the 62% premium offer to Yahoo! January 31, 2008.

Ballmer noted that there has been no meaningful negotiation to conclude an agreement while the public equity markets and overall economic conditions have weakened.  He also noted that public indicators suggest that Yahoo!’s search and page view shares have declined.

Ballmer set the deadline to reach an agreement within the next three weeks, or Microsoft will go hostile and directly go to shareholders.  He will seek to drop change in control procedures, start a proxy contest to elect an alternative slate of directors for the Yahoo! board. and the direct offer to shareholders "will have an undesirable impact on the value"… in short, a lower price will be offered.

You can join our open email distribution list to hear about other mergers, private equity, secondaries, IPO’s and more.

If you’d like to read about Steve Ballmer’s thoughts on the future of search and advertising, Ballmer recently gave some exclusive comments to 247WallSt.com in an interview on this exact topic.

Stay tuned, this one is about to get interesting.

Jon C. Ogg
April 5, 2008

Jon Ogg produces the Special Situation Investing Newsletter; he does not own securities in the companies he covers.

Posted on: April 5, 2008 – 2:57 pm in Internet, Mergers and Buy Outs, Software, ,

Skybus: Another Airline Closes (AMR)(NWA)(DAL)(UAUA

Skybus became the latest US airline to close its doors. Over the last week Aloha Airlines and ATA have also shut down. Northwest (NYSE: NWA) announced that it would raise passenger fares in the hope of offsetting rising fuel costs. The move is not likely to work because consumers and businesses will be slowing travel to help deal with the faltering economy. Higher ticket prices will not help that situation.

According to The Wall Street Journal "Skybus said it regretted the decision. "Skybus struggled to overcome the combination of rising jet-fuel costs and a slowing economic environment," the company said in a statement. "These two issues proved insurmountable for a new carrier."

Part of the reason behind the recent merger talks which have included Northwest and Delta (NYSE: DAL), and at one point may have included United (NASDAQ: UAUA), is to cut costs. It is not clear that such combinations actually improve the high expenses of fuel and labor. Some overlapping routes can be eliminated  Airline mergers always do cause customer service problems as two large airlines try to put together incompatible reservations systems and IT operations. Frustrated fliers often move to other carriers.

Of the large airlines, AMR (NYSE: AMR), parent of American, may be in the worst shape. It carries a high debt load and cannot afford to see its operating income fall.

Skybus is not the last airline Chapter 11 that investors will see this year.

Douglas A. McIntyre

Posted on: April 5, 2008 – 12:20 pm in Airlines, , , ,

NYSE Short Interest Hits Record, Bets Against Financials Drop

The short interest in NYSE stocks hit a record for the March 31 period. The number compare to those on March 14.

Shares short in banks and brokerages began to drop. Short interest in Fannie Mae (FNM) fell 14.7 million to 63.2 million. Shares short in Freddie Mac (FRE) fell 13.8 million to 45.5 million. The short interest in Countrywide Financial (CFC) fell 13.5 million shares to 98 million. Shares short in MBIA (MBI) fell 107 million to 47.2 million. The short interest in Washington Mutual (WM) dropped 5.9 million to 168.9 million.

Short interest in some money center banks rose slightly lead by Citigroup (C) where shares short moved up 2.2 million to 127.8 million. Wells Fargo (WFC) added 2 million shares short making its total 119.5 million. Wachovia’s (WB) short interest rose 1.1 million shares to 106.5 million. Shares short in Merrill Lynch (MER) moved up 6.2 million to 42.9 million.

Other notable increases in the short interest in companies includes General Electric (GE) where shares short moved up 13 million to 57.9 million, Time Warner (TWX) which has a 6.4 million share increase to 44.9 million, Motorola (MOT) where shares short rose 5.9 million to 50.9 million, and Sprint (S) with an increase of 5.8 million to 81 million.

Large companies with drops in shares short included News Corp (NWS) down 13.7 million to 49.3 million, Boston Scientific (BSX) down 12.5 million to 46.3 million, and Halliburton (HAL) down 5.7 million to 57 million.

Data from WSJ and NYSE.

Douglas A. McIntyre

Posted on: April 5, 2008 – 6:13 am in Short Interest, , , , , , , , , , , , , , ,