I think Microsoft is bluffing

My friend Kara Swisher at All Things D seems convinced that Microsoft has shelved its offer for Yahoo for the last time, since a number of senior Microsoft executives “close to the dealmaking” told her they have walked away from the table for good, and have no interest in acquiring the troubled Internet giant — not even if Jerry Yang is ousted as CEO, or the stock drops below $20. I have no doubt that sources told Kara that, since her contacts are usually impeccable. But I think they (even this guy) are still bluffing, and are ready to pull the trigger on a Yahoo deal.

Why do I think that? Unlike Kara, I have no inside sources at Microsoft with knowledge of a deal. But I can’t help but think that if an acquisition of Yahoo made any sense whatsoever at $33 a share, how could it not make even more sense at $23 a share? (I’m not the only one who thinks so) Presumably Microsoft saw synergies between Yahoo’s search business and its own that made a takeover look worthwhile, or it wouldn’t have pressed so hard to get a deal done. So what has changed? Not much — except that Yahoo’s stock has tanked and the company needs Microsoft more than ever.

Yes, Yahoo has cozied up to Google and sold the soul of its search business. But the Google search deal isn’t exclusive, and there isn’t even a “kill fee” if Microsoft acquires Yahoo and then tells Google to take a hike. And I have to think that seeing Google get its hooks into Yahoo has to make Microsoft want the company even more.

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