MSFT's recent bid for YHOO has created so much uncertainity that the deal now looks in favor of GOOG. Uncertainity => fleeing investors => $40 Bn loss in terms of Market Cap for MSFT, already, since the day bid was made.
Lets look at some short term probabilities:
- YHOO rejects the offer ( high )
- AOL may make a similar bid ( very low)
- YHOO partial tie up with Google, where Y! outsources its search ( low)
- YHOO stays independent and opens its search to larger audience ( medium )
- Wait for MSFT to place another bid of $40/share ( high)
- MSFT makes a higher bid leading to further erosion of Market Cap (low)
- Hostile takeover at current price ( medium )
- Antitrust prevents the final deal ( medium)
where medium=0.3-0.4, High = >0.5, low = <0.2
Doing the Math: the probability of the final outcome(i.e. MSFT-YHOO ) = somewhere between low to medium ~ 0.3.
Is the deal worth waiting for ? we will find out tomorrow... or may be not!