Microsoft Bids for Yahoo

I’ve made of this story for months and now it’s coming true. Microsoft (MSFT) is offering $44 billion for Yahoo (YHOO). This comes out to $31 a share. I honestly don’t see how this makes sense at all.
Before taking a detailed look at the businesses, just look at the numbers. For the last three years, Yahoo’s earnings-per-share have dropped from 58 cents to 52 cents to 47 cents. This year, the consensus is for 45 cents. I just don’t get how that equals $31.
Years from now, business students will study how Yahoo was in perfect position to dominate the Internet, but they lost. Google didn’t have to win. The future was in Yahoo’s lap, but they went for Hollywood instead.
Two earnings reports to pass along. AFLAC (AFL) earned 78 cents a share, two cents below estimates. Still, that’s a nice jump over the 66 cents they made last year. The company said that it’s looking to grow EPS by 13% to 15% this year, which works out to EPS of $3.70 to $3.76.
Yesterday, SEI Investments (SEIC) reported earnings of 35 cents a share. That was inline with forecasts. The stock responded by dropping 80 cents a share.
Also, Leucadia (LUK) is buying a large stake in AmeriCredit (ACF) which is an auto finance firm. Leucadia is a shrewd investor and I note this because ACF is in the same industry as our own Nicholas Financial (NICK). NICK will release its earnings on Tuesday.

Posted by on February 1st, 2008 at 8:38 am


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