Told Ya! And Hmmm?

Well now, straight from Fox News — Microsoft walks out on the Yahoo bid. We’ve been saying here that Microsoft has been out of their element on this deal. I say that for this reason. According to a Wired article MS was willing to go as hight as $37/share. More than I would have expected. So the Yahoo board says no by measures not directly associated with the share price. Now if MS has gone to Wall Street with $37 share they might have had a different reception. Remember 84% of the Yahoo Market Cap is held by 10 institutionals. Had they been approached first the Yahoo board would have been cut down.

Now it could still happen. But the matter of trust would be key at this point with th wall street crowd.

“For a merger to work, you have to have good business strategy, a strong operating model with good numbers, and the best people to execute on that model,” said Hewlett-Packard CEO Mark Hurd, at a symposium at Castilleja, a private girls school in Palo Alto, earlier today. “With Microsoft and Yahoo, you’ve got two cultures with very different values and strategies. . . Friendly deals are hard enough to get done. Unfriendly deals are really, really hard to get done.”

And although Microsoft blames Yahoo for its unwillingness to negotiate,this was, in reality, never a deal Microsoft’s own shareholders could get behind: Since Microsoft first went public with its bid on Feb. 1, shares have fallen 10 percent.

Which brings up the question as to Microsoft’s vulnerability in the online space. I would ask, Microsoft has the technical savvy to build a presence. But do they have the business acumen to achieve the goal? And does the Yahoo bid cover a bigger hole on Microsoft’s part in this arena?