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| Microsoft wants to purchase Yahoo | Microsoft wants to purchase Yahoo |
| (10 minutes later) | |
| Microsoft has offered to buy the search engine company Yahoo for $44.6bn (£22.4bn) in cash and shares. | Microsoft has offered to buy the search engine company Yahoo for $44.6bn (£22.4bn) in cash and shares. |
| The offer, contained in a letter to Yahoo's board, is 62% above Yahoo's closing share price on Thursday. | The offer, contained in a letter to Yahoo's board, is 62% above Yahoo's closing share price on Thursday. |
| Yahoo cut its revenue forecasts earlier this week and said it would have to spend an additional $300m this year trying to revive the company. | Yahoo cut its revenue forecasts earlier this week and said it would have to spend an additional $300m this year trying to revive the company. |
| It has been struggling in recent years to compete with Google, which has also been a competitor to Microsoft. | It has been struggling in recent years to compete with Google, which has also been a competitor to Microsoft. |
| See graph of Yahoo and Microsoft shares | See graph of Yahoo and Microsoft shares |
| In a conference call, Microsoft's Kevin Johnson said that the combination of the two companies would create an entity that could better compete with Google. | In a conference call, Microsoft's Kevin Johnson said that the combination of the two companies would create an entity that could better compete with Google. |
| It is a shotgun marriage, but the person holding the shotgun is Google Tim Weber, business editor, BBC News website href="/1/hi/business/7222199.stm">What's at stake, who will win? | |
| "Today the market [for online search and advertising] is increasingly dominated by one player," he said. | "Today the market [for online search and advertising] is increasingly dominated by one player," he said. |
| Chairman quit | Chairman quit |
| Yahoo confirmed that it has received an unsolicited offer and said that its board would evaluate the proposal, "carefully and promptly in the context of Yahoo's strategic plans and pursue the best course of action to maximize long-term value for shareholders." | Yahoo confirmed that it has received an unsolicited offer and said that its board would evaluate the proposal, "carefully and promptly in the context of Yahoo's strategic plans and pursue the best course of action to maximize long-term value for shareholders." |
| If Yahoo accepted the offer, competition authorities both in the US and the European Union would be likely to investigate the tie-up. | If Yahoo accepted the offer, competition authorities both in the US and the European Union would be likely to investigate the tie-up. |
| Yahoo chief executive, Jerry Yang, announced on Tuesday that he intended to lay off 1,000 staff as part of a restructuring plan. | Yahoo chief executive, Jerry Yang, announced on Tuesday that he intended to lay off 1,000 staff as part of a restructuring plan. |
| Terry Semel, who stepped down as chief executive last June, also quit as non-executive chairman on Thursday. | Terry Semel, who stepped down as chief executive last June, also quit as non-executive chairman on Thursday. |
| Microsoft said that Yahoo shareholders could choose to receive either cash or shares. | Microsoft said that Yahoo shareholders could choose to receive either cash or shares. |
| YAHOO'S FALLING PROFITS Oct to Dec 2007 down 23%July to Sept 2007 down 5%April to June 2007 down 2%Jan to March 2007 down 11% Yahoo share priceMicrosoft share priceGoogle share price | YAHOO'S FALLING PROFITS Oct to Dec 2007 down 23%July to Sept 2007 down 5%April to June 2007 down 2%Jan to March 2007 down 11% Yahoo share priceMicrosoft share priceGoogle share price |
| Yahoo shares have fallen 46% since reaching a year-high of $34.08 in October. They opened 51.2% higher. | Yahoo shares have fallen 46% since reaching a year-high of $34.08 in October. They opened 51.2% higher. |
| Microsoft opened 4.3% lower while Google shares fell 6.8%. | Microsoft opened 4.3% lower while Google shares fell 6.8%. |
| "Ultimately this corporate marriage was forced by the rise of Google, which has grown into a serious competitor for both Microsoft as a software company and Yahoo as an internet portal," said Tim Weber, business editor of the BBC News website. | "Ultimately this corporate marriage was forced by the rise of Google, which has grown into a serious competitor for both Microsoft as a software company and Yahoo as an internet portal," said Tim Weber, business editor of the BBC News website. |
| "It is a shotgun marriage, but the person holding the shotgun is Google." | "It is a shotgun marriage, but the person holding the shotgun is Google." |
| 'Exorbitant premium' | 'Exorbitant premium' |
| According to its letter to Yahoo, Microsoft attempted to enter talks about a deal a year ago, but was rebuffed because Yahoo was confident about the "potential upside" presented by the reorganisation and operational activities that were being put in place at the time. | According to its letter to Yahoo, Microsoft attempted to enter talks about a deal a year ago, but was rebuffed because Yahoo was confident about the "potential upside" presented by the reorganisation and operational activities that were being put in place at the time. |
| "A year has gone by, and the competitive situation has not improved," Microsoft's letter said. | "A year has gone by, and the competitive situation has not improved," Microsoft's letter said. |
| But there has been some concern about the price that Microsoft is offering. | But there has been some concern about the price that Microsoft is offering. |
| HAVE YOUR SAY This smacks of desperation from Microsoft who have consistently failed to achieve a meaningful online presence Matt, UKSend us your comments | HAVE YOUR SAY This smacks of desperation from Microsoft who have consistently failed to achieve a meaningful online presence Matt, UKSend us your comments |
| "To me, the premium seems exorbitant, for what is a dwindling business," said Tim Smalls from the brokerage firm Execution LLC. | "To me, the premium seems exorbitant, for what is a dwindling business," said Tim Smalls from the brokerage firm Execution LLC. |
| "I personally don't see how the synergies of Microsoft-Yahoo is going to take on Google." | "I personally don't see how the synergies of Microsoft-Yahoo is going to take on Google." |
| Other analysts were more enthusiastic about the offer. | Other analysts were more enthusiastic about the offer. |
| "It is a fantastic offer. It is game on," said Colin Gillis from Canaccord Adams. | "It is a fantastic offer. It is game on," said Colin Gillis from Canaccord Adams. |
| "This consolidates the marketplace down to Google versus Microsoft. These two companies will be going head to head." | "This consolidates the marketplace down to Google versus Microsoft. These two companies will be going head to head." |
| Back to link | Back to link |