1 - Unfortunately the answer to your last question is "yes" The market doesn't seem to have the same perception of Microsoft that we have

2 - I saw that a while ago. I read it as MS, having tantalised the shareholders, trying to turn the shareholders against the board.

Could be interesting over the next few months but I doubt MS has truly given up.

3 - The highway is strewn with the corpses of people who thought Ballmer/Microsoft were idiots.

ALWAYS ask yourself this when they do something unexpected: "Where's the trick?"

In this case, it is now obvious: Ballmer walks away from buying Yahoo at a major price premium. Yahoo shareholders go "Shit!! I wanted that money!!", and either browbeat Yang, or toss him out altogether.

Meanwhile, in the broader market, Yahoo stock, having risen in anticipation of a deal, will now drop precipitously as people unload in spite.

Stock price is way down, Microsoft comes back and offers far less than they originally did, and scoop up the company on the cheap.

Wanna bet?

4 - I guess this article says it all { Link }

Yang had better watch out. Asking $37 per share when the price was $19.18 at the beginning of the Microsoft bid is CEO suicide given that this is the first concrete chance that investers have had to get out since the 2001 implosion. His two biggest shareholders are simply unamused.

The CEO may think they were worth $37 but as any invester will tell you, your shares are worth what someone is willing to pay for them.

I guess there's room for negotiation. MS really do need Yahoo but they don't need indigestion when they consume it.