Shares of Yahoo climbed as high as $29.73 on Friday ahead of optimism about a Microsoft-Yahoo deal, but Steve Ballmer’s decision to dump the deal after market close rattled Yahoo stock today.
Now that a few hours have passed since the markets opened, shares of Yahoo leveled off a decline that saw its price drop 20 percent in after hours trading on Friday, and a continued drop today.
Where Microsoft once put a deal on the table valuing Yahoo at $47.5 billion, Yahoo now hovers in the $34.2 billion range for market cap. Shares haven’t dropped to pre-Microsoft bid prices now that investors have had some time to digest the rough morning.
With a price at press time of $24.62, Yahoo shareholders may be hanging on to hope that Microsoft’s abandonment of the offer is a negotiating ploy, one that will eventually yield a compromise between the respective CEOs.
The duration of that hope could be longer than the patience of a notoriously fickle stock market. If it becomes apparent Microsoft won’t be coming back right away, at least not until they can truly scoop up the company for a better price, Yahoo shares could sink to pre-Microsoft bid levels.
Analysts opining on Yahoo News held little joy for Yahoo in the aftermath of Ballmer’s departure:
“This squarely puts the pressure on Jerry Yang to deliver results and shareholder value,” Standard & Poor’s equity analyst Scott Kessler said. “You are going to see a lot of shareholders just throwing in the towel because they are going to realize it’s going to take awhile for the stock to get back to where it was Friday.”
“Clearly there’s frustration,” said Darren Chervitz, co-manager of the Jacob Internet Fund, which owns Yahoo stock. “I am not even sure if Yahoo cares about its shareholders because they didn’t show much regard for shareholders’ best interests in this process.”
A few lawsuits emerged in Yahoo’s SEC filings after the company first rebuffed Microsoft’s offer. With the stakes much higher now, we won’t be surprised to hear of more breach of fiduciary suits winging Yahoo’s way.
