As expected, Microsoft launched its Yahoo counterattack on Wednesday as CEO Steve Ballmer said the company isn't raising its bid for the portal and would be just fine without a merger.
Whether Ballmer is bluffing or not remains to be seen. Yahoo reported solid first quarter earnings on Tuesday, but didn't deliver results good enough to force Microsoft to raise its bid. As things stand today, Microsoft is sticking with its $31 a share offer for Yahoo as a Saturday proxy war deadline approaches.
According to Bloomberg, Ballmer said the following at a Microsoft conference in Milan.
"We are offering a lot of money. If Yahoo's shareholders like it, that's great. We are prepared to go forward without a merger with Yahoo."
As for Ballmer's Saturday proxy war deadline, the CEO added "time is money, we've made that clear."
What should we make of all of this banter? Bluster aside it's not inconceivable that Microsoft could raise its bid if it could seal the deal. Time is money for Microsoft too, which is increasingly getting lapped by Google on search and online advertising.
However, analysts widely agreed that Yahoo's results weren't enough to prod Microsoft to up its bid. Needham analyst Mark May summed up the consensus Wall Street view:
"We believe these results do little to accelerate a resolution to the stalemate with Microsoft. With no change in the original terms, Microsoft’s offer values Yahoo! at ~$30.80/share, or ~8% above current levels. We believe Yahoo!’s board will continue to vigorously oppose a transaction and pursue other alternatives aggressively, and it appears Microsoft is taking a firm stance on valuation."
Merrill Lynch analyst Justin Post noted that Yahoo's search monetization growth of 10 percent missed his 20 percent estimate. On the bright side, Yahoo's traffic is stable indicating that the company could monetize it better via an outsourcing deal with Google. Post reckons that a Microsoft purchase of Yahoo is the most likely outcome and that the portal has some leverage to negotiate a higher price.
But for now the stand off continues.