A Lifeline for Yahoo Shareholders

Like a true superhero, Steve Ballmer the CEO of Microsoft has rescued the day! To me he is no less than a knight in the shining armor who has given a new lease of life to the stock holders of an ailing company.

There might be speculations about the ulterior motives behind Microsoft’s offer, but the fact for everyone to see is that it has shaken Yahoo out of the deep sleep. Their shares had been on a downward spiral ever since mid 2004 while the rest of the stock market escalated. Google seemed unstoppable, rolling in the cash!

And then came Microsoft with its $44.6 billion bid ($31 a share). Rising from the slumber, Yahoo stock hit the roof from $19.18 on Thursday night to $29.27 on Monday.

All the Yahoo share holders have been given a lifeline. I would suggest that you sell your shares while you can and take what Microsoft is offering you -$31 a share. That's a hefty price- 62% more than the market.

The other option that Microsoft is dishing out is 0.9509 Microsoft shares in lieu of $31 a share. This share is only worth about $29 today. The bid is half cash and half shares. So the value averages out at around $30 right now.

Tax is another issue you look into before making a decision but I would still suggest that you take what you can, while you can. There is every chance that something could mess up the takeover. So why take a chance!