Yang’s ego and approach to the Microhoo offer has alienated many of his shareholders. With the company’s leverage pretty much used up. It is where it was before, a failing business plan that fails to expand. Investors panicking that they will lose all of their investment and looking for a small ray of sunshine. If Microsoft could offer in my opinion between $25 to $30 a share they could get the business. As shares nose down below the $20 mark it will only increase their chances. Because even at that, the price tag would still be substantial especially in an area where availability of capital investment is dodgy.

In the last year all Yahoo managed to do was to prove that Microsoft was the best “$” alternative. The ball was in Yang’s court and he flubbed it. Not because he failed to sell to Microsoft, but that he failed to win the ‘hearts and minds’ and patience of its shareholders. Instead he showed the kind of ego in a CEO that draws self-styled Don Quixotes of Wall Street looking to knock down another arrogant rich guy(hey didn’t say they weren’t hypocritical).

Exit strategies are being looked at by all, and one of the best keys in town is held by Microsoft. If Microsoft does purchase the company they will need to expend some to retain what is left from the ongoing brain-drain at Yahoo (which is happening at all level, most of which has been induced by Yang). One of the preconditions should be the removal of the recently added Platinum parachutes clause into the company’s ‘charter’.

Yahoo needs something and its not Google. It might not really be Microsoft, but its slowly boxing itself in and can’t expand out the way it should. It needs a big teammate, Microsoft offers the best alternative not only for growth, but also for long term survival.

How does this make sense? The stock price is almost exactly what it was when they made the first offer, so why would it seem like a bargain now?