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Quick Hits: Yahoo Feels the Microsoft Heat


Brief scrutiny of today's headlines

Microsoft (MSFT) is turning up the heat in its attempt to buy Yahoo (YHOO).

Microsoft Chairman Steve Ballmer sent a letter to Yahoo's board over the weekend, warning that it had three weeks to accept the $31 per share offer it made more than two months ago. When the deadline expires Microsoft will go hostile, offering shareholders a lower price or nothing at all.

According to The Wall Street Journal, Yahoo CEO Jerry Yang and Chairman Roy Bostock responded to Ballmer with a letter reconfirming their stance that the Microsoft offer "substantially undervalues" the Yahoo brand.

Yahoo shares are currently trading at 10% below the original offer, indicating skepticism over the deal getting done at $31. If Microsoft resorts to a hostile bid and starts a proxy fight, shareholders may see the value of their holdings erode even further.

Yahoo may be asking for a heap of trouble by continuing to rebuff Microsoft. After all, who would want to play hardball with this guy?

For more on Microsoft check out Hoofy & Boo's always astute report.

No positions in stocks mentioned.

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