Attribution: Dan Appleman

Yesterday Microsoft walked away from the deal that would have combined the companies at a price tag of around $46B. I love Yahoo, I use My Yahoo as my start page (and have for years and years.) I think Yahoo does some great stuff, but $46B was a big premium over intrinsic value for the company.

If you’re a Microsoft share holder, you should breathe a sigh of relief that management did exactly the right thing in this instance: walk away. If Microsoft waits on this one, they’re still going to be able to buy Yahoo, but at a lower price (this is making a bet that Yahoo will not execute their business plan and grow profitably.)

If you’re a Yahoo shareholder, you’d best hope the company executes. It can be worth what Microsoft bid, but it’s not today and that’s the simple truth. For now, shareholders should be prepared for a ride back toward what the intrinsic value of the issue rather than the bid inflated price. Hope you cashed in whilst you could.

I do not own shares of either Microsoft or Yahoo.