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'Micro-hoo', Indian stocks & more...

Feb 4, 2008

  • Internet search behemoth Google has raised 'competitiveness' issues against Microsoft's decision to acquire the beleaguered Yahoo for a consideration of US$ 45 bn. In terming the software giant as using 'hostile' means to curb competition, Google has raised concerns that the acquisition of Yahoo could allow Microsoft 'to extend unfair practices from browsers and operating systems to the Internet.' As a matter of fact, Google leads the Internet search space by a wide margin, having a share of 62%, compared to a share of 13% of Yahoo and just about 3% of Microsoft. In fact, Google has itself been termed as a 'monopolist' when it comes to the Internet business and smaller firms have welcomed Microsoft's proposal for Yahoo as it is seen as a way that will pare the dominance of Google.

    The fact that Microsoft, the world's largest software maker has offered US$ 31 per share for acquiring Yahoo - a 62% premium over the latter's last Thursday closing price indicates the seriousness with which the former is pursuing its Internet growth strategy, as its software business growth seems to be tapering off. Whatever be the case, Microsoft's high bid also indicates that stocks in the US, especially those from the technology pack, have gotten cheap, for reasons mentioned below.


  • Jim Rogers, the commodities guru and the co-founder (alongwith George Soros) of the Quantum Fund, has dire predictions for the US economy and stockmarkets. He says, and we quote - "Conceivably we could have just had recession, hard times, sliding dollar, inflation, etc., but I'm afraid it's going to be much worse. Bernanke is printing huge amounts of money. He's out of control and the Fed is out of control. We are probably going to have one of the worst recessions we've had since the Second World War. It's not a good scene."

    We believe that such predictions from one if the world's best investors in commodities hold much weight. And if one were to go by the acts of Ben Bernanke and his team at the Federal Reserve, things do not seem so good. The impact on Indian stock market in the US (tech stocks like Yahoo getting cheap), Europe and emerging nations like India is a vindication of the same. While India might be relatively insulated from a US economic recession considering that the dependence on exports in not so large, heightened risks will definitely have an impact on foreign money flows into Indian stocks.

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