Is Yahoo Worth Buying?

I think Microsoft needs Yahoo, but just how high a price should Microsoft pay?  

If I had a billion dollars, I'd be rich (with my apologies to Barenaked Ladies). If I were trying to buy Yahoo, I wouldn't even be in the running.

Microsoft offered $44.6 billion, or $31 a share, a 62 percent premium on Yahoo's share price at the time, for Yahoo. And what did the Yahoo board do? They sneered at it because the offer "substantially undervalues" the company.

Boy, I wish I could sneer at $44.6 billion. So, what would Yahoo consider a fair price? Maybe, some stock analysts have suggested to me, oh say, $60 billion. No offense to my day trading friends, but I think they're getting a wee bit greedy with those estimates.

Indeed many people don't care for the proposed Microhoo. Google, of course, doesn't like it, but they've got their own priorities and messing with Microsoft's proposed Yahoo deal is near the top of the list. The more the deal costs Microsoft the better, as far as Google is concerned.

Some people, however, really hate the idea. Henry Blodget, the well-known CEO and editor in chief of Silicon Alley Insider, a New York digital business community news site called the proposed acquisition a "disaster" in the making. Blodget went on to say that Microsoft CEO Steve Ballmer "is not used to losing. They're doing something that's conceptually smart, but that's not going to work."

Why? Well there are the usual reasons. There's no real synergy between Microsoft's Windows-based software and Yahoo's FreeBSD/open-source Web 2.0 applications. The two companies' corporate cultures are as mixable as oil and water. And, lest we forget, Yahoo's in trouble. As I started writing this story, I see that Yahoo began firing, excuse me, laying off the first of 1,000-plus employees.

Yahoo, tell me again how Microsoft has undervalued the company. I'm sure your newly unemployed staffers would love to hear the details.

Meanwhile, Microsoft is undeterred and insists that it's going to buy Yahoo. It's not upping its offer, yet. Instead, it seems to want to see if it can get the stockholders to accept its offer over Yahoo's board recommendations. Some of Yahoo's stockholders, an informal group named Group B, seem to be in favor of the deal.