Ballmer still dreaming of a Yahoo acquisition?

October 16, 2008

ballmergartner.jpgHere’s Microsoft’s Steve Ballmer during a keynote interview at a Gartner’s ITXpo, where — in case you somehow missed the news, the chatter, and the stock market reaction — he reportedly said a deal with Yahoo may still make economic sense.

His comments sent Yahoo’s stock up as much as 12 percent before a Microsoft spokesman clarified to say that there were no current discussions between the companies. Furthermore, “Microsoft has no interest in acquiring Yahoo.”

So what’s the story? It seems the notion of a deal is still simmering in Ballmer’s mind, but there is, of course, the overwhelming question of price.

When Microsoft made an offer for Yahoo back in May, it was priced at $33 per share. Yahoo rejected the deal. Now Yahoo’s stock is trading at about $13.  That leaves a lot of room for negotiation. Maybe too much room.

Why not take a stab at playing investment banker? What’s a fair price for a Microsoft-Yahoo deal now?

(Photo: Courtesy of Gartner)

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Microsoft will certainly do well if it acquires Yahoo. Some of the reasons are: A great brand name on the Internet that is well established since the mid 1990s, users like me who are accustomed to doing a Yahoo search in addition to doing searches using Google, MSN, and other search engines, and a Web site with popular features like geocities, Yahoo games, and chat. In addition to 275 million Yahoo e-mail users around the world.

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