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Originally Posted by yumcimil  Yeah, saw that over the weekend. Seems a lot like a negotiating tactic, rather than a "Hell no, we won't sell!" sort of thing. It's not like Microsoft are exactly short on funds. |
Actually, Microsoft are short of funds; they had US$50bn in the bank ~18months ago, but engaged in share buybacks and granting dividends (the latter is an activity they have avoided historically but have had to start using recently to prop up the share price) as well as some other acquisitions; the end result is that the offer of US$44bn as a 50/50 cash/stock deal was almost certainly arrived at on the basis of "how much cash we got? Oh. Ok, double it with stock at the current profit announcement bump value."
In other words, US22bn is all the cash MS have. Hence the market jitters over the offer and an MS share price drop. Hence the headline figure of 44 is now more like 41. And Yahoo! prices are above the original offer price i.e. anyone who wanted the cash can now sell for *more* than the offer.
So if MS raises their bid and keeps it 50/50, they will have to borrow large sums of money (as in 11 figures, not counting the .00!) to cover the cash part of the purchase, putting the company into debt for the first time in recent history (at least the last 10 years). The larger the offer and the greater the debt incurred, the longer it will take to ever pay off. And so their share price will drop even further, and so the offer value will reduce and so on and so on.
A high stakes game indeed. And I think EU regulators would only let the sale complete if monopoly areas were hived off, e.g. Zimbra is safe.
Still think Zimbra should be GPL'd though...