Kara Swisher interprets the public silence in Redmond and Sunnyvale as a sign that Microsoft (MSFT) and Yahoo (YHOO) are in quiet negotiations. This would certainly make sense. Yahoo (YHOO) hasn’t found any better options, and the release of its 2009-2010 financial plan didn’t result in calls for the company to go it alone.
Kara hears that options on the table include raising the price to $34-$36, changing the offer’s stock and cash mix (boosting the cash piece, presumably), making big option grants to key Yahoo players, and/or granting Yahoo more independence.
Some form of price increase is a given, in our opinion, but there’s a big difference between $34-$36 and a mere shift in the cash/stock mix of the current offer, which–at best–would bring the price back to the original $31 (It is currently $28.77). Now that Yahoo has managed to hit its Q1, we expect to see a final deal price above $31. It’s possible that the hike will be all the way to $35, but we wouldn’t yet take this to the bank.
TechCrunch says the option grants to key employees are already happening. And as for the “independence,” this is definitely the way to give the post-deal combination the best chance of success. Kara thinks it through in detail here.
See Also: The Microsoft-Yahoo Bid Calculator
Photo credit: Kara Swisher