03/28/2008 02:46 am ET Updated May 25, 2011

Is Microsoft Ready To Pull Its Yahoo Bid?

Kara Swisher revives an issue we raised a few weeks back: What happens if Yahoo (YHOO) blows Q1? This question has no doubt been bandied about in Microsoft (MSFT) conference rooms as an exasperated Steve Ballmer watches Yahoo's molasses-like response to its bid.

The Valley Bigwig outlined this strategy to us two weeks ago

msft drags heals til april 22 when y announces q1 which shd suck bigtime. Pulls bid. Stock to teens. Then returns at 25 w teeth. Funds wd move fast to accept

Got that? Microsoft goes about its business until early April--nominating its slate of board members, preparing for a hostile shareholder meeting--and then, just after Yahoo reports a horrendous first quarter, pulls its offer for the company. Yahoo's stock collapses, costing shareholders 40% overnight. Jerry & Co. are pummeled with shareholder complaints and lawsuits, and Yahoo's employee and shareholder morale hit all-time low. Then, just when all hope seems lost, Microsoft comes charging back and saves the day with a $25 bid, and Yahoo owners flatten Jerry & Co. in a stampede to tender their shares.

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