Microsoft Could Walk Away From Yahoo!, Or Drop Offer (YHOO, MSFT)

The heat between Microsoft (NASDAQ: MSFT) wanting to acquire Yahoo! (NASDAQ: YHOO) may be cooling.  Or it may just be a negotiating tool to show Jerry Yang that he’s up the creek with no paddle if Microsoft just quits its offer.

The talk is now all over after-hours that Microsoft may be reevaluating its buyout offer for the #2 search player.  This is after the companies met earlier this week to no avail.  The report is being tied to Dow Jones Newswire although this started coming out all over that this might want to still be considered as hearsay.

Microsoft (NASDAQ: MSFT) shares are up almost 2% to $29.70 in after-hours trading and Yahoo! (NASDAQ: YHOO) shares are down nearly 5% to $27.01 in after-hours trading.

We have covered this on numerous angles before.  But the angle that Jerry Yang better be taking into consideration is what angle shareholders are going to put his head into the guillotine at if he lets the offer die.  Yang and $30 YHOO on its own is a long ways off.  Shareholders have been more than frustrated.  His head will roll over this and his "Chief Yahoo!" title will change to "Chief SNAFU." 

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Jon C. Ogg
April 4, 2008

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