Google offers to help Yahoo!?
So according to the Wall Street Journal, Google reached out to Yahoo! and offered to do whatever it could to help the company thwart the bid from Microsoft...do I detect a little fear on Google's part?
This is either a signal that bidding will heat up from other sides (private equity, etc.) or Microsoft may have Google just a tad bit nervous which would mean that after this merger goes through, it's time to buy MSFT!
Any thoughts from "The Hounds"?
Answers
2184 points
ChaosNantuko answered 2 years ago …
Theres a big risk here. If your right, you make a lot. If your wrong, you lose a lot. I just don't like the risk/reward situation for how this can play out.
That being said...
Even between microsoft and yahoo, google still beats them on market share, and seems to beat them from a technological perspective. This would be bad for google, but not extremely so. Google's price is dropping because earnings are decellerating. Yet i suspect people will still point to this merger in the future as the reason google continues to go down.
Theres 2 possibilities.
Google buys yahoo.
Google goes down (as most companies do after a buyout, especially if theres a bidding war or potential anti-trust issues), yahoo goes up. Microsoft does badly as its search engine is practically guaranteed to fail to be the most popular (although that doesn't mean it won't be amazingly profitable, investor perception may take the day here).
Microsoft buys yahoo.
Microsoft goes down (same short term reasons as google, minus the anti-trust issues), yahoo goes up. Google remains relatively unaffected (in that it continues its intermediate term downtrend)... Microsoft and Yahoo remain a small player in the space compared to Google.
Right now, i'd say both google and microsoft are probably going down from here, and yahoo is probably going up a little, although most (not all) of the speculation that will drive up prices is probably priced in at this point.
Still, I'm not liking the risk reward on any of these trades.
