No One Can Call the Odds on Microsoft-Yahoo!

Reporters who say the deal has X-percent chance of happening are doing investors a disservice.
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Whether you are a voter waiting on the next primary weeks away or a savvy investor watching an important deadline pass in silence, you are right to have weapons-grade concern about how the media fills the vacuum.

Take it from The Business Press Maven: Nothing to report and a lot of time to report it in is a dangerous combination. This is what we are faced with, after

Yahoo!

(YHOO)

let a

Microsoft

(MSFT) - Get Report

deadline to agree to its merger terms expire without action or comment on Saturday.

Leave it to commentator Henry Blodget to commit the most tempting, characteristic and misleading mistake, whether you are talking politics or pending mergers: slapping a fixed percentage on the chance of something happening. It looks good and makes you sound like you know what you are talking about. Witness the headline on a Blodget

blog post

: "60% Chance Microsoft Walks From Yahoo Deal (MSFT / YHOO)."

They Just Don't Get MicroHoo!

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Remember, when it comes to much business commentary, speculation is involved. And often we see a lot of rank speculation, which is OK if you label it as such. But putting fixed numbers in the headline when the future is anyone's guess can trick investors into thinking you know more than you do. Nothing legitimizes a number more than seeing it in print.

The Wall Street Journal

was far less committal with its headline than Blodget, proving it had a firm grasp of the obvious: "Microsoft Confronts Tough Choice on Yahoo." That said, the

story's

reasoning was solid and more convincingly predicted that Microsoft wouldn't dare walk away. The story also appropriately drew a historical parallel between this deal and the

Oracle

(ORCL) - Get Report

-

BEA Systems

deal:

"Ending its pursuit of Yahoo seems less likely following Mr. Ballmer's promise to go directly to shareholders after the deadline. Abandoning the bid following his public saber rattling might damage his own credibility as well as Microsoft's. Though Microsoft hasn't ruled out abandoning its pursuit, it is unlikely to do so, people close to the company said.Walking away could still draw Yahoo into Microsoft's arms if Yahoo's share price falls on the news. That could spark more investor pressure to strike a deal with Microsoft. Oracle Corp. followed a similar playbook last year to acquire BEA Systems Inc."

And speaking of history,

CNBC

looked all the way back to, uh, Thursday. That's when Microsoft chief financial officer Chris Liddell said that his company would abide by the April 26 deadline, meaning a proxy fight would then ensue. (If this seems to contradict Blodget's contention that "Microsoft's public statements have now gone beyond threats to what appears to us to be acceptance and resignation" about the deal falling apart, it does.)

CNBC

left no doubt about

how it expects

the deal to turn out:

"A Microsoft deadline for Internet service company Yahoo to accept its $44.6 billion acquisition offer expired at midnight Saturday, setting the stage for a hostile takeover bid by the software giant."

Though

CNBC

, like the

Journal

, mentioned Microsoft's soft earnings report, released Friday, it did not explain how this had an impact on the company's stock price, complicating a potential deal. The

Journal

and even Blodget did.

You want The Business Press Maven's speculative take? I say Yahoo! did not wish to lose face by crumbling at Microsoft's deadline. Yahoo! knew that Microsoft's light earnings put pressure on them and that no one wants a fight. So in the end, Yahoo! is still holding out for what it will probably get: a few more face-saving bucks. Everyone will be able to declare victory and head home together.

At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.

Marek Fuchs was a stockbroker for Shearson Lehman Brothers and a money manager before becoming a journalist who wrote The New York Times' "County Lines" column for six years. He also did back-up beat coverage of The New York Knicks for the paper's Sports section for two seasons and covered other professional and collegiate sports. He has contributed frequently to many of the Times' other sections, including National, Metro, Escapes, Style, Real Estate, Arts & Leisure, Travel, Money & Business, Circuits and the Op-Ed Page. For his "Business Press Maven? column on how business and finance are covered by the media, Fuchs was named best business journalist critic in the nation by the Talking Biz website at The University of North Carolina School of Journalism and Mass Communication. Fuchs is a frequent speaker on the business media, in venues ranging from National Public Radio to the annual conference of the Society of American Business Editors and Writers. Fuchs appreciates your feedback;

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