Microsoft’s stock was down Friday, but Yahoo may not have much reason to hope for a higher price in the acquisition drama. Despite lower-than-expected revenues, analysts said Microsoft isn’t likely to raise its takeover bid.
Microsoft on Thursday announced third-quarter revenue of $14.45 billion, operating income of $4.41 billion and diluted earnings per share of 47 cents. Operating income and earnings per share results included a charge of $1.42 billion, or 15 cents per share, for a European Commission fine.
“Our third-quarter results demonstrate the benefit of our diversified business model,” said Chris Liddell, Microsoft’s chief financial officer. “Our broad span across geographies, product categories and customer segments is a tremendous asset and supports our outlook for double-digit revenue, operating income and earnings per share growth for this fiscal year and also for fiscal year 2009.”
What Does this Mean for Yahoo?
Yahoo has rejected Microsoft’s $44.6 billion takeover bid — twice. Microsoft CEO Steve Ballmer sent what amounts to an ultimatum letter to Yahoo’s board in early April. The letter made clear that Microsoft’s goal in making “such a generous offer” was to create the basis for a speedy and ultimately friendly transaction.
Ballmer wanted Yahoo to authorize a team to negotiate and come to a definitive agreement. He then threw down the gauntlet: a three-week deadline to come to a conclusive agreement — or else. That three weeks ends on Saturday. Yahoo is still not budging, and neither is Microsoft.
In the earnings call, Liddell offered an update on Microsoft’s plans: “Speed is of the essence for the deal to make sense. Unfortunately, the transaction has been anything but speedy and has been characterized by what would appear to be unrealistic expectations of value.”
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