Sherlund maintains a Buy rating on Microsoft shares and a $32 price target. As far as vague rumors that have floated around today, Sherlund states simply, “we do not see a compelling strategic fit and think this is unlikely.”
On the intense speculation regarding Yahoo!, he has a little more to offer on why an outright buyout makes no sense, writing?
We believe Microsoft has the benefit of scale in search through their current relationship with Yahoo and see no need to acquire the company. ?It is possible that Microsoft may be part of a larger group to invest in a minority position in Yahoo for some strategic business relationship, but this is very different than Microsoft buying Yahoo, that ship sailed by a few years ago and is unlikely, in our view, to be revisited given that Microsoft now has the scale they desired in search through their existing relationship with Yahoo. There are other parts of Yahoo that are likely of strategic interest to Microsoft, but there are likely smarter ways to work together than buying the company.