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. “Dilutive to earnings” is zero-sum which is why I didn’t mention it unless the combination changes the growth or quality of the earnings. MSFT is going to make it through anti-trust on this but Google is going to be giving them a hard time. There is never good news in govt scrutiny for stockholders