It's a big-time poker game and Yahoo has responded to Microsoft's move. Silicon Alley Insider's Henry Blodget has another astute analysis.
>> How Will MSFT Respond To YHOO's Counter?
Our current guess, therefore, is that Microsoft will respond to Yahoo's counter-offer by trying to win over Yahoo's big shareholders and biding its time.
Paul Kedrowsky, however, has a higher value on Yahoo than Blodget does.
>> Yahoo: Rejecting Microsoft; Entering the Bargaining Stage
Is Yahoo right to bargain? Sure. Most sum-of-parts analysis of Yahoo -- my own included -- puts Yahoo's breakup value somewhere between $35 and $42, depending on how much you want to trust the valuations of Alibaba and Yahoo Japan. That's materially over Microsoft's offer, doubly so if you consider that Microsoft has a legitimate strategic interest in owning Yahoo, making this more than a purely valuation-driven exercise.
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