Technology for Mortals

Microsoft has dropped its bid for Yahoo after Yahoo rejected the $33/share from Microsoft.  Analyst Laura Martin expects Yahoo shares to drop $8 on Monday in the wake of this news and she expects some shareholder lawsuits.

Laura Martin: “I think you’ll see a number of shareholder lawsuits on Monday. They’ve prioritized employees over shareholders in the hopes that someday they can create more than $8 billion of value, even if they have no track record of doing so,”

All I can say is wow, some heads are going to have to roll over this one at Yahoo.  If Yahoo drops back down to $20 a share, we’re talking about a one-day swing from a potential of $33 down to $20 a share which is a $17 BILLION DOLLAR hit!  It’s a good thing that I don’t own any individual stocks but if I did own Yahoo stocks, I’d probably want to strangle Jerry Yang right about now.  However, I think the folks at Capitol World will beat me too it.

Steve Ballmer is sure to attract some negative headlines but I think Microsoft is better off without Yahoo.  The vast majority of these large mergers destroy value anyways.  It would have been a bad marriage by all accounts and I personally know Yahoo employees that can’t stand the idea of switching platforms to Microsoft.  Microsoft would be better off using the money to hire better employees and pay the good employees they have more money to retain them.  There’s lots of better ways to spend $45B.

Ok, it seems that the press is mostly praising Microsoft.  Mary Jo Foley goes as far as saying that this has restored her faith in the future of Microsoft.

Update 3/5/2008 – looks like Yahoo “only” dropped to $24.37 on Monday.  Microsoft initially shot up more than 3% but ended up more than half a percent lower.  I guess the initial reaction from Microsoft shareholders was “yes, they gave up Yahoo” and then as the day moved on it turned “oh crap, what does Microsoft do now”.  Google seems to have shot up 2.34% on Microsoft and Yahoo’s misery.