What do you guys think? I think its a solid move from Microsoft. What do you think about the price?
Google is still N1. Cant imagine why would anyone use live or yahoo sarches
YHOO is not just search…I agree, I never use YHOO… But MSFT wants to compete against GOOG for search and this acq will provide a base…also, Yahoo finance is much more advanced than Google’s…meaning, Yahoo does have somethings to offer.
Google finance is much sharper to look at and in a sense I think more user friendly. Yahoo finance on the other hand has 10X the info including different country’s, currenices, more history etc. In general, Yahoo finance is better. This would likely be a good day to pick up Google one would think considering how hard it is being hit, or maybe wait for it to gte to $500??
I like Google better than yahoo (and have switched to Google Finance too). There is still a large Yahoo user base (especially for things like mail, groups, IM and stuff), and I think MSFT can benefit and focus more on competing directly with google.
WOW! I gotta think about this one…
help me understand. MSFT down 2.1 on news 9.6 shares outstanding: -$20B mkt value Yhoo up 8.5 with 1.3B shares outstanding +$11B mkt value net: -$9B mkt value… doesn’t make sense to me. is that what IB call “reverse synergies”
Google finance is a joke, but google search and gmail are much better than yahoo’s offerings.
MFE Wrote: ------------------------------------------------------- > help me understand. > > MSFT down 2.1 on news 9.6 shares outstanding: > -$20B mkt value > Yhoo up 8.5 with 1.3B shares outstanding +$11B mkt > value > > net: -$9B mkt value… doesn’t make sense to me. > > > is that what IB call “reverse synergies” C’mon - you do understand. This isn’t anything like zero-sum. If Yahoo is a lemon this is good news for Yahoo but bad news for MSFT. Not to mention the change in capital structure, business model for MSFT, the admission that MSN search is worth 0, the impending anti-trsut problems (great - get justice honked off again)…
Ooh, I like this analysis. Never thought about it that way. Thanks!
Let’s do the arbitrage now!!!
Among the games I think nobody should play at home is risk arbitrage, particularly when they are big like this. Every risk arb hedge fund in the world is laying down their bets and they have vastly more resources than anyone else. There is no chance you can beat them at this so you should regard the price as really efficient. Which of course doesn’t mean that I didn’t just spend lunch talking about how I would bet.
JoeyDVivre Wrote: ------------------------------------------------------- > MFE Wrote: > -------------------------------------------------- > ----- > > help me understand. > > > > MSFT down 2.1 on news 9.6 shares outstanding: > > -$20B mkt value > > Yhoo up 8.5 with 1.3B shares outstanding +$11B > mkt > > value > > > > net: -$9B mkt value… doesn’t make sense to > me. > > > > > > is that what IB call “reverse synergies” > > > C’mon - you do understand. This isn’t anything > like zero-sum. If Yahoo is a lemon this is good > news for Yahoo but bad news for MSFT. Not to > mention the change in capital structure, business > model for MSFT, the admission that MSN search is > worth 0, the impending anti-trsut problems (great > - get justice honked off again)… however if YHOO was a lemon, their share price should have accounted for that before the deal? I know you can’t zero sum numbers out of the stock market (especiallly straight from equity shares as there is debt (including yhoo convertibles out there) b/c there is a lot of synergy and risk associated with a deal, however, one could argue, the risk arb community sees opportunity that the general public does not, as I assume they continue to drive the deal arb down… I understand a couple billion of mkt cap loss due to what you mentioned including anti-trust etc, but $9B? that’s 1/3 of mkt cap of yhoo before the deal…does the market think msft will f’up that bad with yahoo after acquiring? Who ever said the market was rational needs to come and sit on our desk for a week. EMH my ass
MFE Wrote: ------------------------------------------------------- > JoeyDVivre Wrote: > -------------------------------------------------- > ----- > > MFE Wrote: > > > -------------------------------------------------- > > > ----- > > > help me understand. > > > > > > MSFT down 2.1 on news 9.6 shares outstanding: > > > -$20B mkt value > > > Yhoo up 8.5 with 1.3B shares outstanding > +$11B > > mkt > > > value > > > > > > net: -$9B mkt value… doesn’t make sense to > > me. > > > > > > > > > is that what IB call “reverse synergies” > > > > > > C’mon - you do understand. This isn’t anything > > like zero-sum. If Yahoo is a lemon this is > good > > news for Yahoo but bad news for MSFT. Not to > > mention the change in capital structure, > business > > model for MSFT, the admission that MSN search > is > > worth 0, the impending anti-trsut problems > (great > > - get justice honked off again)… > > > however if YHOO was a lemon, their share price > should have accounted for that before the deal? I > know you can’t zero sum numbers out of the stock > market (especiallly straight from equity shares as > there is debt (including yhoo convertibles out > there) b/c there is a lot of synergy and risk > associated with a deal, however, one could argue, > the risk arb community sees opportunity that the > general public does not, as I assume they continue > to drive the deal arb down… > > I understand a couple billion of mkt cap loss due > to what you mentioned including anti-trust etc, > but $9B? that’s 1/3 of mkt cap of yhoo before the > deal…does the market think msft will f’up that > bad with yahoo after acquiring? > > Who ever said the market was rational needs to > come and sit on our desk for a week. EMH my ass That was Eugene Fama who now doesn’t believe it himself. But having him sit at your desk would be a great experience for you.
How does one do the arbitrage? I understand the idea of Buy Yahoo, Sell Google to make a profit as share prices adjust to the deal values, but how does one make it riskless? And how do you balance the shares purchased and sold properly?
Risk arb is certainly not arbitrage. Either buy MSFT short Yhoo or reverse depending on your bet. But as you say, there are some plays on Goog here too
> > however if YHOO was a lemon, their share price > should have accounted for that before the deal? I > know you can’t zero sum numbers out of the stock > market (especiallly straight from equity shares as > there is debt (including yhoo convertibles out > there) b/c there is a lot of synergy and risk > associated with a deal, however, one could argue, > the risk arb community sees opportunity that the > general public does not, as I assume they continue > to drive the deal arb down… > > I understand a couple billion of mkt cap loss due > to what you mentioned including anti-trust etc, > but $9B? that’s 1/3 of mkt cap of yhoo before the > deal…does the market think msft will f’up that > bad with yahoo after acquiring? > > Who ever said the market was rational needs to > come and sit on our desk for a week. EMH my ass This has NOTHING to do with anti-trust. If it did, then Microsoft stock would be down a lot less. The market doesn’t like this deal (Microsoft’s perspective), Anti-trust issue would be a clear Positive for MSFT’s Shareholder. The main reason why the stock is down is because the deal is dilutive to earnings. That’s why the stock is taking a beating. The deal will be $0.12 dilutive to EPS (no one is really give MSFT the benefit of the $1B synergy, and I don’t blame them). at 17x ( $0.12) = translate into share price decline of $2.04. The market is acting rationally on this news. I don’t see anything wrong with a ~$2 decline in MSFT’s share price.
negativefcf Wrote: ------------------------------------------------------- > > > > however if YHOO was a lemon, their share price > > should have accounted for that before the deal? > I > > know you can’t zero sum numbers out of the > stock > > market (especiallly straight from equity shares > as > > there is debt (including yhoo convertibles out > > there) b/c there is a lot of synergy and risk > > associated with a deal, however, one could > argue, > > the risk arb community sees opportunity that > the > > general public does not, as I assume they > continue > > to drive the deal arb down… > > > > I understand a couple billion of mkt cap loss > due > > to what you mentioned including anti-trust etc, > > but $9B? that’s 1/3 of mkt cap of yhoo before > the > > deal…does the market think msft will f’up > that > > bad with yahoo after acquiring? > > > > Who ever said the market was rational needs to > > come and sit on our desk for a week. EMH my > ass > > This has NOTHING to do with anti-trust. If it did, > then Microsoft stock would be down a lot less. The > market doesn’t like this deal (Microsoft’s > perspective), Anti-trust issue would be a clear > Positive for MSFT’s Shareholder. > > The main reason why the stock is down is because > the deal is dilutive to earnings. That’s why the > stock is taking a beating. The deal will be $0.12 > dilutive to EPS (no one is really give MSFT the > benefit of the $1B synergy, and I don’t blame > them). at 17x ( $0.12) = translate into share > price decline of $2.04. > > The market is acting rationally on this news. I > don’t see anything wrong with a ~$2 decline in > MSFT’s share price. yhoo grows at same pace as MSFT?
> > yhoo grows at same pace as MSFT? ?? I am confused by this question. Yahoo is not growing faster than MSFT but its only ~10% of MSFT’s PF revenue. That shouldn’t really impact the P/E multiple substantially.
negativefcf Wrote: ------------------------------------------------------- > > > > yhoo grows at same pace as MSFT? > > > ?? I am confused by this question. > > Yahoo is not growing faster than MSFT but its only > ~10% of MSFT’s PF revenue. That shouldn’t really > impact the P/E multiple substantially. I am questioning the dilutive effect. YHOO’s “concensus” earnings growth is much faster then MSFTs, so you can not simply look at EPS dilutive effect.