Microsoft's Yahoo search bid worth billions

As part of Microsoft's last bid to acquire Yahoo's search business, it was willing to pay the search giant $1 billion in cash and also structure a deal that would have brought Yahoo $1 billion in operating income per year, a source told CNET News.com on Friday, confirming details reported earlier in the day by Reuters.

That deal would have seen Microsoft taking on the operations of the search business as well as its research costs, according to another source. In addition, Microsoft was willing to guarantee Yahoo better monetization than Yahoo gets from its Panama engine, that source said.

That was on top of another component of the deal, in which Microsoft would have paid $8 billion to acquire a 16 percent stake in Yahoo at $35 per share, sources said.

It's all part of an offer that Microsoft has said would have offered Yahoo shareholders more than $33 a share, though I'm still not totally clear on how that math works and whether it counts on Yahoo selling some of its Asian assets.

This was the deal that Yahoo ultimately rejected, saying search was too strategic, at the same time then inking a deal with Google to deliver some of those same search advertisements.

I can only imagine that all of these details are making steam come out of Carl Icahn's ears. The billionaire investor is now left either taking a loss on Yahoo or becoming a long-term shareholder. And that's not to mention the palpable frustration of those who were already long-term Yahoo investors.

[firestarter]

what the hell is yahoo doing. Microsoft offered you 1 BILLION and you walked away from that. your shareholder are going to kill you.

[JCPayne]

How would Yahoo sell their search??? Hello!!! it is based at Search.yahoo.com

[Penguinisto]

Bad money is bad money. MSFT only wanted one thing from it - the chance to kill off a competitor. That $1bn/year would likely last just long enough for MSFT to quietly bleed its purchase dry has, then strangle the thing and throw its dried-out husk of a corpse back to Yahoo. The Google deal is far more promising (not perfect - just promising), in that it at least guarantees an income within clearly definable parameters. That said - seeing Icahn get his comeuppance is kinda funny.

[DKT27]

Its a childish thing that Yahoo has done ,so far, by rejecting microsoft's offer and now you can see if they had accepted it they would earn twice more a year than what they are earning now.

[fdunn3]

It is just funny (not being a shareholder in Yahoo) watch as the announcents are being made and what it is simultaeusly to the value of Yahoo, MS, and Google's stock values.
When Yahoo finally disapproved the sale of it's search business in favor of outsourcing it to Google it is apparent that Yahoo's stock value is going down on heavy trading. At the same time Microsoft and Google's stock values rose.
That was of Friday afternoon's stock exchange close. This morning I anticipate seeing the volume of Yahoo stock being traded peaking while shareholders try to squeeze what little value is left out of Yahoo. That being said, a heavily sold/traded stock value decreases as the panic stricken holders try to get what they can over the price of Yahoo's stock before the original Microsoft offer (`$19/share). With Friday's closing offering prices for Yahoo were at $22.75 and with the high volume today after Yahoo's announcements I anticipate that the volume will peak again this morning and close at less than when MS first made it's offer. Yahoo has very little leverage in the search business anymore and It's shareholder know they are going to take a loss if they don't get rid of the stock quickly.
Foreshadowing any miracles I see Yahoo losing even more ground and stock prices tanking at about $10/share before the year is out.