February 03, 2008

 

Why would Microsoft buy Yahoo?

Here is my theory. Microsoft has cash. Lots and lots of it. In last 5 years, Microsoft has made profit of $54 billion. 3 years ago, Microsoft paid dividend of $32 bn for the first time in their corporate history. They returned that money to shareholders probably because there was no better use of that money. Once again, today, when they are sitting on huge mountain of cash, buying Yahoo for $22bn cash and $22bn stocks doesn't seem to be bad use of that money.

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