Yahoo Shares Off Sharply in Wake of Dropped Microsoft Bid
Posted on: Monday, 5 May 2008, 18:00 CDT
As analysts had expected, Wall Street pummeled Yahoo today after Microsoft's decision Saturday to throw in the towel in its bid to acquire the Sunnyvale Internet company.
Yahoo's shares fell $4.70 to $23.97 in early trading, a drop of more than 16 percent.
The company's stock had hit $28.67 a share on Friday in expectation of a deal finally being reached with Microsoft. That was up significantly from Jan. 31, the day before Microsoft's offer, when Yahoo's stock was priced at just over $19.
Meanwhile, this morning, Microsoft has been getting a warm response from investors. In initial trading, shares of the Redmond, Wash, software giant rose 60 cents, or a little more than 2 percent, to $29.84.
Some experts had predicted the market might punish Yahoo for failing to strike a deal with Microsoft Chief Executive Steve Ballmer, who had sought the marriage because Microsoft needs a partner to compete with Google, which dominates online advertising revenue.
Microsoft had offered to buy Yahoo for $44.6 billion, or $31 a share. After repeatedly refusing to up his ante, Ballmer last week offered to raise his bid by $5 billion. But it wasn't enough for Yahoo's board, which insisted their company was worth much more than that.
On Saturday Ballmer finally gave up. In a letter to Yahoo's Chief Executive Jerry Yang, he concluded, "clearly a deal is not to be."
Source: San Jose Mercury News
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