By Tiffany Wu and Michele Gershberg
Corp
Shares of Yahoo fell as much as 20 percent in early Nasdaq
trading before recovering some to trade at $24.47, still down
14 percent and far below the $33-per-share Microsoft offer.
"I think at $24, the stock's overvalued as a standalone
Yahoo," said Mike Binger, a fund manager at Thrivent Financial,
which owned both Yahoo and Microsoft shares. "I think $33 was
fairly generous for Yahoo and if Yahoo won't accept it, they
(Microsoft) did the right thing in walking."
Microsoft Chief Executive Steve Ballmer withdrew the bid on
Saturday after talks collapsed, with Yahoo CEO Jerry Yang
demanding $37 per share.
Shares of Microsoft rose 0.5 percent on investor relief
that it was not overpaying for Yahoo, though concerns remained
about how the software maker would develop its Web strategy in
the face of a dominant Google Inc.
"We did like the idea of the Yahoo acquisition in the long
run for Microsoft, but we did have reservations about how high
a price they were willing to pay," said Dan Davidowitz, a
portfolio manager at Polen Capital Management, which owns
Microsoft and Google shares. "I'm not necessarily certain that
the Yahoo deal is completely off the table."
One clear winner from the collapse of Microsoft-Yahoo talks
is Google, whose shares rose 2 percent. A deal would have been
one of the biggest mergers in the technology sector and may
have threatened Google's steady expansion on the Web.
"The terminated Microsoft-Yahoo negotiations eliminate the
risk for now of a stronger online advertising competitor to
Google," Stifel Nicolaus analysts George Askew and Scott Devitt
wrote in a research note.
SHAREHOLDER PRESSURE
Analysts expect a flurry of shareholder lawsuits against
Yahoo, even as the Web pioneer pursues possible deals with
other Internet media and advertising companies, such as Time
Warner Inc's AOL Internet division.
But Yahoo's share fall was not as steep as the 30 percent
plunge anticipated by some analysts, indicating there was still
an "acquisition premium" built into the stock.
At $24.47, the stock is comfortably above its January 31
close of $19.18, before Microsoft disclosed its unsolicited
offer.
"This is going to play out over the next several months and
there is still a chance Microsoft will buy the company for
somewhere around $33 a share," said Todd Dagres, general
partner at venture capital fund Spark Capital. "What Microsoft
is hoping is that Yahoo shareholders get militant."
Yahoo is likely to push for a search advertising deal with
Google, sources familiar with the matter said. That should
boost Yahoo's operating performance in the near term, but runs
the risk of regulatory scrutiny over an alliance between the
Internet's top two players.
Already, some Yahoo shareholders have started to make their
discontent public.
Bill Miller, a portfolio manager for Legg Mason, Yahoo's
second-largest shareholder, told the New York Times in a Sunday
interview that he would have considered selling to Microsoft
for $34 or $35 a share.
While that was more than Microsoft's offer, it was less
than the $37 per share Yahoo's board insisted on.
(Additional reporting by Muralikumar Anantharaman in
Boston; Editing by Derek Caney and Braden Reddall)
0 comments:
Post a Comment