Microsoft's Quiet Deadline

Today is April 29, 2008 and really isn't a very significant day. It's the 119th day of the year, it's the day after my birthday, its 16 years after the Rodney King Riots, and it is 3 days past the deadline set by Steve Ballmer for Yahoo to enter into negotiations regarding the looming acquisition by Microsoft.

Last week analysts and those in the search marketing community waited on pins and needles as the Saturday deadline approached. The deadline came and went with not so much as a murmur from either the Microsoft or Yahoo. This lack of information however did not deter analysts from throwing their opinions and theories into public view, some forecasting passive outcomes while others seem to be looking forward to an all-out hostile takeover.

With varied Q1 results and their stocks falling 6% last Friday closing at $29.83, it seemed that the chances of Microsoft walking away from the largest deal in their history was not entirely out of the question. Chief Financial Officer Chris Liddell said Microsoft could "withdraw our proposal and focus on other opportunities, both organic and inorganic."

Silicon Alley Insider pundit Henry Blodget predicted that there is a 60% likelihood that the company would walk away. Blodget stated, "their squishy quarter makes it less likely that Microsoft's rising stock will raise the value of Microsoft's bid on its own."

Others believe that it is incredibly unlikely that the Redmond Giant will simply just walk away, after so aggressively pursuing Yahoo. Many think that the lack of action on Microsoft's part is simply just a bluff, before they become "hostile" in their takeover attempts.

Citi Internet Analyst, Mark Mahaney, has been making predictions on the Microsoft/Yahoo takeover battle since the Redmond behemoth announced their plans on February 2nd. Now nearly two months later his predictions stand as such: 45% chance of a merger at a price somewhat higher than the initial bid, a 40% chance that Microsoft will go hostile, a 10% chance that Microsoft walks away, and a 5% chance for deal at the original bid to be accepted. This means he believes a deal in some form is 90% likely, which is substantially higher than what other analysts have guessed.