Content Matters

Lots of blog posts and tweets on the Microsoft (NASD:MSFT) - Yahoo (NASD:YHOO) breakup this morning.  If the market closed now (1pm EST), my prediction in Fred's poll would have nailed it:

I pegged it at $24, though I think it may initially trade down to the $21-22 range before trading back up to a close of $24-25.

So, while I'm on a hot streak (one in a row), I'll throw a few more predictions out there:

1. Jerry Yang will step down by December as the stock languishes in the $20-22 range
2. Microsoft announces a big acquisition (Salesforce (NASD:CRM)?) by the end of the summer, so Ballmer can repair his reputation.

Here's some of the interesting comments on the blogs and twitter:

Henry Blodget reports that Yahoo claims it didn't realize MSFT had bumped up the offer to $33 until they received Ballmer's letter. His take: First, Microsoft walked away in part because of price and in part because Steve Ballmer lost his enthusiasm for the deal. In our opinion, this makes a future deal less likely (especially over $33). Second, Yahoo misjudged Steve Ballmer's commitment to the transaction and, as a result, blew it.

Rafat Ali notes that big institutional investors would have pushed Yahoo to make the deal if the offer was at $34 per share -- just a dollar more than Microsoft's final offer.

Paul Kedrosky notes "this is a red letter day for VCs, btw. not only aren't two startup acquirers turning into one, MSFT & YHOO are going to be buying like mad."

John Blossom suggests the breakup was good for Yahoo based upon the two companies approach on IP: "While there were some important synergies that would have come out of a Microsoft deal, in general it would have been an acquisition by a company driven by old concepts of intellectual property value of a company that is starting to move far more aggressively into new concepts for realizing the value of intellectual property."

Doug McIntyre suggests as a next step that Microsoft buy Chinese search engine Baidu (NASD:BIDU), noting that Asia is the future growth spot for Internet search and that Baidu's current market cap is $12 billion, a fraction of the $47 billion it offered for Yahoo.

From a shareholder perspective, who's been the biggest winners and losers?
Looking at stock price changes since the deal was announced on Jan 31 and including today's close:

MSFT dropped from $31.91 to $29.08, a loss of nearly 9%
YHOO has gained 29.7%, going from $18.87 to $24.47
GOOG, meanwhile, has gone from $511 to $595, a gain of 16% by executing its plans while watching its supposed competitors implode.