I initially sold 87.5% of my YHOO shares, then an additional 7.5%.  I am now down to a mere 5% and still believe that MSFT will end up buying YHOO but for something in the $31-33 range, here is why:

- in MSFT’s latest response, they seemed to outline what angry shareholders need to do to force the Board to accept MSFT’s $31 offer, let alone its $33 offer.

- MSFT now avoided becoming the bad guy, instead turning itself into a prospective white knight against a strengthened Google (by way of a YHOO search deal), AOL merger (which let’s face it, now that the MSFT deal is off, will not be done).

- News Corp., might change sides again, but what we fail to recognize is that by bidding $44.6B for YHOO at $31/share - and agreeing to $33/share or $46.2B - all would-be buyers know they must come in at $45B or so otherwise MSFT can always re-enter the picture.

MSFT’s withdrawal is at most a very short term lucky bounce for Yang and YHOO; in the short, mid and long term, it makes MSFT look like a welcome savior for YHOO investors.