A few months ago, I wrote a posting about the insanity of anyone paying billions of dollars for Yahoo. The insanity seems to be spreading. Microsoft walked away finally. Yahoo shares are trading at $24.50. Journalists are talking seriously about how the company is somehow worth $37 per share. If they wanted to buy Yahoo shares at $37 today, it seems that they would have no shortage of sellers.
Thanks to the miracle of inflation, I think it is possible that a share of Yahoo will be worth $37 one day. And when you sell that share, you can buy yourself a 40 oz. Diet Coke (the obesity epidemic will render 20 oz. soda bottles obsolete).
In response to your Feb post, I stated that “the only rational conclusion I can see from this deal is to buy Google stock.”. 3 months later, GOOG is up 16% (vs 6% for S&P 500), mostly in the last month when Google influenced the deal. I think YHOO will never reach $37 – I believe it’s only downhill from here and should be shorted. Why? It’s clear they can’t compete effectively with Google and if anything may need Google more in the future. As painful as it was for Ballmer’s reputation, walking away from the deal is the right business decision to make for Microsoft.