February 17, 2008 / 11:18 PM / 10 years ago

Microsoft bid for Yahoo makes no sense: Barron's

NEW YORK (Reuters) - Respected investment manager Joe Rosenberg doesn’t think much of Microsoft Corp’s (MSFT.O) unsolicited $42 billion bid for Yahoo Inc YHOO.O, nor the financial savvy of its chief executive, Barron’s reported in its latest issue.

In an interview with the business weekly, the chief investment strategist for Loews Corp LTR.N said although he was bullish on Microsoft, he was still critical of Chief Executive Steve Ballmer’s leadership of the company.

“It’s a bad refection on Ballmer that he’s willing to pay a ridiculous price for Yahoo. Microsoft is not going to earn anything like a reasonable rate of return in Yahoo,” Rosenberg was quoted as saying.

“It just doesn’t make sense. It will be even more ridiculous if Microsoft increases its bid,” he said.

    Rosenberg noted the market was reflecting his view since Microsoft’s stock is down by four points since it announced the bid. Microsoft stock closed at $28.42 on Friday.

    “That’s almost $40 billion of value destruction which is nearly as much as the value of Microsoft’s bid for Yahoo,” he told Barron‘s. “The best thing of all would be if Microsoft drops the bid.”

    Asked if it wasn’t a strategic necessity for Microsoft to buy Yahoo, Rosenberg said: ”I don’t buy that. Yahoo would significantly dilute Microsoft’s returns.

    “Ballmer is a great operating man but he lacks financial acumen. He ought to be thinking more of Microsoft employees who own a lot of Microsoft stock and have nothing to show for it in many years. If the stock doesn’t start doing better, Microsoft will lose good people.”

    Editing by Jeffrey Benkoe

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