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5 tech companies that could use a bailout

18.11.2008
Now that the government has pledged to bail out the financial banking industry and is considering lending $25 billion to help the avoid bankruptcy, many tech companies may be wondering where to get their hands on government bailout cash. While tech companies may not have the same level of clout among Washington policy makers as AIG or General Motors, some of the industry's biggest players have been hit hard times in recent months and could certainly use a health infusion of cash to help them right their ships. Here's our take on the five biggest tech companies that are most in need of a helping government bail out.

Bailout Candidate #1: Yahoo

The numbers: recently said that it would lay off "at least" 10% of its global workforce before year-end; third-quarter 2008 revenue only increased 1% over third-quarter 2007 revenue; third-quarter 2008 net income of $54 million was just over one-third the size of its third-quarter 2007 net income of $151 million; share price has declined by more than 60% over the past year, currently stands at around $10.75 per share.

What's gone wrong: Look back to the heady days of last February, when Yahoo was confidently rejecting to purchase the company for $44.6 billion. Apparently, Yahoo was pushing for Microsoft to increase its offer to $56 billion, which would have translated to a value of about $40 per share. What a difference nine months makes: Yahoo's share price is now hovering in the $10 range and its proposed arrangement to with search rival Google was scuttled on fears that the U.S. Department of Justice would the deal from going through.

The turnaround strategy: At the moment, Yahoo is clearly rethinking its decision to reject Microsoft's bid from earlier in the year. Yahoo CEO Jerry Yang recently acknowledged at a Web 2.0 conference that "the best thing for Microsoft to do is buy Yahoo" and that he would be willing to sell the company "at the right price whatever that price is." Unfortunately for Yahoo, Microsoft CEO Steve Ballmer recently indicated that his company has "moved on" and that was currently in the works.

Bailout candidate #2: Sun Microsystems