Yahoo rejects microsoft bid

Just one week after Microsoft made its surprising $44.6 billion cash and stock bid to purchase Yahoo, the venerable search engine rejected the bid. As if to add abuse to hurt, Yahoo's board of directors agreed nem con. Someone get me some Zea mays everta; the fight is just beginning.

It's true that Microsoft has been workings on some kind of deal with Yahoo for the past 18 calendar month now, so it shouldn't seem like a shock. It's also true that, earlier Microsoft's offer, Yahoo's stock had been dropping in price; at the master price of $31 per share, Microsoft was offer Yahoo stockholders a 62 percentage premium over the recent closing price on the hunt engine's stock. Yahoo has taken a whipping for the last eight one-fourth; if the substitution of Terry Semel as CEO with co-founder Jerry Yang will save the company, we didn't see any signs of it earlier Microsoft made its bid, at least in the price of Yahoo's shares.

But that was then, and this is now. Thanks to the stock market's reaction to Microsoft's bid, the software system giant's stock has lost 13 percentage, while Yahoo's stock has shot way up, to as high as $29 per share. All of a sudden, Microsoft's bid doesn't look so good any longer. Once again adding insult to hurt, the dip in price of Microsoft's stock reduces the company's value by about $42 one million million - or about the price that Microsoft wants to legal tender for Yahoo.

Yahoo thinks that price is way too low. Here is how the hunt engine's board of directors explained it in a company press release:

"After careful evaluation, the Board believes that Microsoft's proposal well undervalues Yahoo! Including our global brand, large worldwide audience, significant recent investing in ad platforms and hereafter growth prospects, free cash flow and net income potential, as well as our substantial unconsolidated investments. The Board of Directors is continually evaluating all of its strategic options in the context of the rapidly evolving industry environment and we remain committed to pursuing initiatives that maximize value for all stockholders."

That looks like a straightforward rejection, unless you read between the lines. Yahoo is saying that Microsoft's bid undervalues the company. Does this imply that Yahoo would be open to a larger offer?