Microsoft makes a play for Yahoo!
Microsoft made an unsolicited $44.6 billion cash-and-stock bid for Yahoo!, offering $31 a share, a 62 percent premium over yesterday’s closing price. The two companies talked about tighter cooperation in late 2006, Microsoft said, but Yahoo! had rejected the idea of a takeover. (Bloomberg) The offer sent Yahoo! shares up 54 percent in premarket trading. (AP in Yahoo! Finance) Both companies are losing ground to Google in the race for online ad dollars. “We have great respect for Yahoo!,” said Microsoft CEO Steve Ballmer, but a combined company would be “better positioned to compete in the online services market.” (Reuters)
Chinese miner, Alcoa stake Rio Tinto claim
Chinese mining firm Chinalco teamed up with the U.S.’s Alcoa to buy a 12 percent stake in Rio Tinto, the world's No. 3 mining company. The $14 billion buy-in threatens to derail larger rival BHP Billiton’s unfriendly takeover bid for Rio Tinto. (Bloomberg) The news sent Rio Tinto shares up 16 percent in London early today. BHP has until Feb. 6 to make a firm offer, under a deadline set by British regulators. (MarketWatch) Many analysts said the Chinalco move would make BHP would walk away. But “the door is still very much open for BHP,” argued Michael Rawlinson at Libernum Capital. “12 percent is not a blocking stake.” (Reuters)
Motorola floats cellphone unit sale
Motorola said it is considering selling or spinning off its slumping mobile devices unit. The company’s two smaller businesses—home networking and TV set-top boxes, and business wireless devices—are profitable and worth about $30 billion. ( The announcement sent shares up 10 percent in extended trading. (AP in Yahoo! Finance) Motorola, the top U.S. mobile phone maker, fell from No. 2 to No. 3 worldwide last year, and new management has been unable to reverse its declining fortunes. Leading investor Carl Icahn has been pushing for a spinoff. But “in the end, separation of a business entity doesn’t really create value,” said RBC analyst Mark Sue. (Reuters)
Google profit underwhelms
Google reported a 17 percent rise in quarterly profits, to $1.21 billion. That was slightly under what analysts were expecting and the first quarter in which Google’s net revenue did not rise by at least 25 percent. (AP in Yahoo! Finance) Google earned less than it expected from its ad deal with MySpace, and paid clicks rose a lower-than-normal 30 percent. Investors were also concerned about rising expenses; Google hired 889 people last quarter and spent $678 million on infrastructure. “Google’s metabolism is catching up with it,” said Motley Fool analyst Rick Munarriz. “Google has been like a teenager that keeps eating at the buffet, and now it’s going straight to the hips.” (Los Angeles Times, free registration)