All eyes on Microsoft, Yahoo!; monoline plan stagnant; Radyne ready to sell

By Aaron Hochman-Zimmerman

New York, Feb. 5 - As stocks were being chopped at the knees, investor's attention fell to Microsoft Corp.'s harsh courtship of Yahoo! Inc.

For most, the 370.03 or 2.93% loss from the Dow Jones Industrial Average and the 44.18 or 3.2% loss from the S&P 500 was too great to consider moving deals forward.

Still, the speculation continued over not if, but when Yahoo! will finally succumb to Microsoft's advances, despite the wishes of Google Inc.

The internet battle of the heavyweights took the top billing from the other battle of the heavyweights; the struggle for a monoline bailout.

While Yahoo! fought for its life, both Radyne Corp. and the Sun-Times Media Group Inc. put themselves in the window for sale and Corporate Express NV denied it was involved in take-over talks.

Microsoft sharpens knives for Yahoo!

Microsoft Corp. (Nasdaq: MSFT) stock was lower by $1.12 or 3.71% to finish at $29.07 as it continued whetting its carving knives for Yahoo!, (Nasdaq: YHOO) which lost $0.35 or 1.19% to close at $28.98.

Microsoft's eagerness to cut off a bigger slice of the internet pie may lead it to borrow, even in the form of a bond, which would be a welcome and likely triple-A rated addition to the debt world, a market source said.

The bond may be as large as $5 billion and offer a yield of Treasuries plus 160 basis points, he said.

Microsoft's determination may also raise Yahoo!'s price tag.

Microsoft would rather pay a higher price than press through a long legal battle over a hostile bid, the source said.

Yahoo! itself is not without ammunition or at least bargaining chips, the source said.

By liquidating Yahoo! Japan and Alibaba, it may be able to bring $18 billion to bear, he said.

There is a long history of companies snapping at Yahoo!, but the latest round of competition may work to its benefit.

Names such as Comcast Corp. and News Corp. have been discussed as possible suitors for Yahoo!, but News Corp. chairman Rupert Murdoch denied any interest.

"We are definitely not going to make a bid for Yahoo," he told the BBC.

Analysts have indicated that, however unlikely, the only entity with the power to stop Microsoft is the government.

Certain legislators have indicated the deal will come under strict review before it is allowed to proceed.

Reps. John Conyers and Lamar Smith of the House Judiciary Committee issued a statement about what they called "one of the largest technology mergers we've seen."

The deal "presents important issues regarding the competitive landscape of the internet," they said, according to the BBC.

Should the deal go through, the Senate Judiciary Committee's antitrust subcommittee will also hold hearings, said senator Herb Kohl, according to a market source.

Hearings are also expected in the House Committee on Energy and Commerce's Subcommittee on Commerce, Trade, and Consumer Protection within the next few months, a source said.

Still, "after they just approved DoubleClick [Inc.] it would be hard to say no to Microsoft and Yahoo!," he said.

However, the relationship between Microsoft and the European Union is more contentious than the relationship with the United States, the BBC reported.

"Microsoft would have to divest from some of its European portals," the market source said.

Despite eager anticipation, no definitive news dribbled out of any of the camps involved on Tuesday.

"Every possible speculation is out there," the source said, pointing to the Citigroup note which detailed five possible outcomes.

Citigroup predicts Yahoo! will take a beefed up bid from Microsoft, but it left open a 25% chance that Yahoo! will hitch its wagon to Google rather than Microsoft, the market source said.

Radyne hangs 'for sale' sign

Radyne Corp. (Nasdaq: RADN) stock picked up steam to the tune of $0.28 or 2.99% to close at $9.63 after its announcement on Monday that it is exploring strategic alternatives, including the sale of the company, according to a press release.

"The board and management are united in their efforts to diligently explore strategic alternatives and to maximize shareholder value," said Myron Wagner, Radyne's chief executive officer in the release.

Radyne also expects revenues for 2007 to be between $141 and $144 million with resulting per-share earnings between $0.55 and $0.59 per fully diluted share.

Earnings in 2007 were negatively impacted by the severe financial difficulties of one of the company's European customers.

The Phoenix, Ariz.-based electronic hardware producer has set no timetable for any possible deal.

"They've just started the process," a market source said.

MBIA, Ambac losing limelight

The monoline rescue operation was again silent on Tuesday.

The lack of progress on Monday was blamed for that day's 100 point loss from the Dow Jones Industrial Average.

Tuesday's 370.03 point beating could be just as easily blamed on the difficult day in Europe, a market source said, but investors have their attention diverted.

"Everyone is Microsoft/Yahoo!," he said.

Corporate Express denies Staples talks

The Netherlands' Corporate Express NV (NYSE: CXP) stock launched up by $2.11 or 32.51% to $8.60 even as the company took careful aim to dispel rumors printed in Dutch papers that it is in merger discussions with Staples Inc. (Nasdaq: SPLS). Staples stock was down $0.81 or 3.49% to $22.41 on the day.

"Although the company as a matter of policy never comments on rumors, in this situation Corporate Express wishes to make clear such discussions are not taking place," the company said in a press release on Tuesday.

The selling of the Sun

The Sun-Times Media Group Inc. (NYSE: SVN) stock clawed its way higher by $0.03 or 2.17% to end the day at $1.41 as the company is mulling over putting itself on the market.

"Our board's decision to explore strategic next steps now is the right thing to do to ensure the future of the Sun-Times Media Group publications and websites and to generate the highest value for our shareholders," said Cyrus Freidheim, Jr., Sun-Times Media Group chief executive officer, in a news release.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.