By Michele Gershberg and Anupreeta Das
Corp
Yahoo shares could fall by more than 30 percent on Monday
over the breakdown of talks, but that drop could be softened if
Wall Street believes Yahoo Chief Executive Jerry Yang has
another strategy up his sleeve, analysts said.
Yahoo is likely to push for an advertising partnership with
Web search leader Google Inc, sources familiar with the matter
said. A tie-up with Google, seen as a big winner from the end
of Microsoft-Yahoo talks, should help boost Yahoo's operating
performance in the near term.
"It's time to get a move on with Google," said Jeffrey
Lindsay, analyst with Sanford C. Bernstein. "Let's hope they
weren't bluffing."
Yahoo is also still considering a deal with another
Internet media and advertising major, such as Time Warner Inc's
AOL, people familiar with the discussions said.
But Yang and the company he helped create could face a
flood of shareholder lawsuits or other actions if nothing
materializes.
"There are two things that could support the stock: the
potential for Microsoft to return and the potential to do a
Google deal," said Clayton Moran, analyst at Stanford Group.
Moran said Yahoo shares could fall to the mid- to low-$20
range on Monday from their $28.67 close last week. Other
analysts said it could slip closer to $19.18, where it closed
on January 31, a day before Microsoft made its offer public.
Microsoft shares are likely to rise on Monday, with its
investors relieved that Chief Executive Steve Ballmer didn't
shell out billions more for Yahoo, analysts said.
Microsoft on Saturday sweetened its initial $31-per-share
offer for Yahoo to $33, but then withdrew from the talks when
Yang dug in for a price of $37.
SHAREHOLDER CHALLENGE
While some Yahoo investors hoped it could wrest a price
closer to $35 per share from Microsoft, a dissident shareholder
said he would challenge Yang and the board over the collapse of
talks.
"Shareholders didn't even get a chance to vote on the deal,
but the board negotiated on our behalf and not in good faith,"
Eric Jackson, who leads a group of investors who collectively
own 2 million Yahoo shares, told Reuters.
He said he would urge shareholders to withhold votes from
the company's directors this year.
Yahoo officials were not immediately available to comment.
Bernstein's Lindsay estimates Yahoo could be worth up to
$35 per share with a Google deal, and even $37 with more job
cuts, but that drops to $25 per share if no partnerships are in
the offing.
Yahoo has conducted tests with Google to outsource some of
its search listings to its arch-rival. It has also held talks
in tandem with AOL and Rupert Murdoch's News Corp.
searchIAC/InterActiveCorpAsk
(Additional reporting by Kenneth Li in New York; Editing by
Braden Reddall)
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