[posted on 5/5 at 1:39 AM]
Yeah, I'm still awake, and just checked my RSS reader, and I can't believe how "everyone" seems to assume that YHOO is going to take a beating tomorrow, while MSFT will not. I really don't get this.
From the start it seemed to me that Microsoft was dealing from weakness; they needed Yahoo more than Yahoo needed them (and they definitely wanted Yahoo more than Yahoo wanted them; in fact, all of Yahoo's actions signaled they were not interested). Microsoft increased their price, and was probably willing to increase their price more, but they realized that 1) Yahoo was really not interested in being bought (people are one of Yahoo's key assets), and 2) Yahoo was willing to make themselves less valuable in order to prevent being bought (via deals like the Google adwords test).
At the end Yahoo got what they wanted (being left alone to execute) and Microsoft did not (they don't have a new cool strategy for online success). Meanwhile Yahoo's quarterly financials were good, and Microsoft's were not. So tell me again why Yahoo's stock is going to suffer tomorrow, and Microsoft's will not?
If I was a market player - which I am most assuredly not - I would buy Yahoo and short Microsoft. This seems a clear case where the so-called experts are wrong, and a contrarian could make some money. Stay tuned, we'll see what happens
[posted on 5/5 at 9:30 AM]
So what happened? YHOO opened down (20%) and has trended up since; MSFT opened up (2%) and has traded down since:
There was a lot of volume right at the start. If I had bought in the market when it opened, taken YHOO long and MSFT short, I would be looking pretty good right now. Easier to do on paper than with real money :) Stay tuned...
[posted on 5/7 at 8:30 AM]
The endgame? YHOO has now levelled, but definitely came up from open on Monday, while MSFT is roughly the same as Monday open; it went down for a day, and then came up for a day.
The most interesting thing that's happened is the rumors that the conversation continues... Apparently there are enough Yahoo shareholders who are disappointed that the deal didn't take place at $33 (given that YHOO is at $25, and hasn't been anywhere near $33 for over a yead). Also of interest are stories trying to find other companies for Microsoft to buy - like AOL (!?)