ThePanelist.com - Follow Up: Yahoo Response to Microsoft's Letter

Follow Up: Yahoo Response to Microsoft's Letter

Written by David Neubert

Monday, 07 April 2008

So Yahoo (YHOO - $27.82), calls out Microsft (MSFT - $29.30) and details responses to their fight over Yahoo's online brand, assets and people. Larry Dignan at ZDNet does a fantastic job of ironically translating the letter from Yahoo to Microsoft.

What does this all mean? Yahoo is willing to have a proxy fight and thinks they can win. A deal between Microsoft and Yahoo is probably further away than ever. The situation is starting to look like a lose-lose for Microsoft. Either they pay up too much for Yahoo and dilute their share price, or after a long proxy battle, Microsoft eventually acquires an engineer/key employee depleted Yahoo at the lower stock price.

Photo:Gnal, Creative Commons, Flickr

What will I do? MSFT is up a little today so I'll either write calls against more of my MSFT position or I'll decrease it a little. No, I won't get out entirely. I would exit if MSFT approached $40.

Disclosure: I own Microsoft (MSFT) and am short 31 strike calls against 1/4 of my position. I recently sold all my Yahoo (YHOO) common and bought 30 strike calls. I am a fan of Yahoo products: I like their search, email, deli.cio.us, small business services and am addicted to flickr. Yahoo has managed to extract money from me on an annual basis for what I consider valuable services.

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