Wednesday, 20 February 2008

Microsoft not intending to raise its stake in Yahoo!

Microsoft is not intending to raise its offer on the original $42 billion (£21.5 billion) cash-and-shares offer for Yahoo!, the software group’s chairman said yesterday. Bill Gates said that Microsoft’s bid was “full and fair” and insisted that there had been no confidential negotiations between the two sides to try to agree a deal after Yahoo! rejected his group’s original bid this month.

It is not sure what the next step would be for Mr Bill Gates as he declined to spell out what he planned to do next. The expectation is that Microsoft aims to test the opinion of Yahoo! shareholders by nominating alternative directors to challenge the Yahoo! board. The deadline for filing is March 13.

Mr Bill Gates said: “We can afford to make big investments in the engineering and marketing that needs to get done. We will do that with or without Yahoo! But we also see that we’d get there faster if the great engineering work that Yahoo! has done and the great engineers in Microsoft were part of the common effort.”

Separately, there were signs yesterday that Alibaba, Yahoo!’s Chinese partner, was trying to exert some influence in the deal. Yahoo! owns 39 per cent of Alibaba, which runs an internet marketplace. The business is controlled by Jack Ma, its founder, who wants to retain a similar level of autonomy under any new ownership.

Last night it was reported that Yahoo! plans to offer its employees enhanced severance benefits in the event of their jobs being cut after a change in control of the company. (source: Timesonline)

Alliance & Leicester's suffered a $360.4 million (£185 million) writedown on its exposure to risky assets. Britain’s seventh-biggest bank, reported a 2007 pretax profit of £399 million down from £569 million in 2006. Underlying core operating profit rose 3% from 2006 to £602 million.

Alliance & Leicester warned three weeks ago that its writedown on holdings of structured investment vehicles (SIVs) and other products tarnished by the US subprime housing crisis had more than tripled from a previous estimate to £185 million. Profit was also knocked by a £10 million loss on ineffective hedges and £8 million of redundancy costs.

Alliance & Leicester calmed worries about funding problems in November by saying it had agreed medium-term financing facilities, and said it had funding to see it through to the first quarter of 2009. (source: The Independent)

8 Reason why it is better to buy a business for your road to financial independence (by Richard Parker):

When done right, buying a business lets you achieve returns of 25% to 33% on your cash investment. Try getting that consistently in the stock market.

Unlike a job, there is no limit to how much money you can make.

There are enormous tax benefits when you own a company that you cannot take advantage of as an employee.

As you grow your business, the value of your investment will build exponentially.

Since you will be inheriting an infrastructure, you can take as much vacation as you would like. Try doing that with a job!

For every dollar of growth that you generate, you will get back three times or more when the time comes to sell the company.

You can acquire additional assets that complement your business - such as commercial real estate - and cover all the costs from the cash flow of the business.

From a tax perspective, the bulk of the business’ appreciated value can be taxed at favourable capital gains rates when you ultimately sell the business.

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