Yahoo: Set for an Up $7, Down $2 Trade

As the Google (GOOG) ad deal is likely to be scrapped, I am looking for the eventual sale of Yahoo (YHOO) to Microsoft (MSFT) at around $19-$22 per share, compared to a previous offer in the low $30s. Call option activity is heating up for November in Yahoo around the $13-$16 area, with over 20,000 contracts traded today at the $20 strike for January 2009.

 

Carl Icahn has stated previously on CNBC's Fast Money show that some type of deal will get done with MSFT, and Icahn will likely discuss the issue when he appears on again on Fast Money on Monday 11/3. I think YHOO is set for an up $7, down $2 trade at this point and could combine with AOL (TWX) first, then have MSFT buy both to better compete with Google (GOOG) on the web.

Comments

[jack dee:]

You might be looking for a sale @ 19 - 22 . But that has nothing to do with real world.

Would you care to show us how you work out your numbers? Or are they just number that you like. I like 55 , perhaps they will pay that? No wait I am looking for $1900 a share!

2008 Oct 31 05:30 PM

[Stockhound:]

It's roughly a double at today's closing share price. It sounds about right.

2008 Oct 31 08:55 PM

[13958:]

At this atge of the game, I would take almost any price to sell YHOO and switch to MSFT!--at least "over there" they pay a dividend!

2008 Nov 01 09:22 AM

[buyforeclos...:]

Boo hooooo hoooo

2008 Nov 01 12:37 PM

[grishick:]

Seriously, give it up already... wasn't it made clear by Yahoo! management that they do not want to get acquired? What reason do they have to sell now? Smart ppl sell at high and buy at low, not the other way around. For Yahoo! to sell now would be really unsmart. If you long YHOO - stop watching the ticker, because in recession it is not going to be pleasant no matter, what you long. Check back in a couple of years.

2008 Nov 01 06:33 PM

[creative ca...:]

somebody want to explain what they mean by a up$7 down $2 trade and what do you expect icahn to say he's down over 50% on yhoo he'll say anything to give it a pop and didn't anyone read a few weeks ago when msft told yhoo to give up hope?

2008 Nov 02 07:37 PM

[Mike Havrilla:]

> somebody want to explain what they mean by a up$7 down $2 trade:

If Yahoo's primary defense for refusing original MSFT deal was prospect of an ad deal with Google and now that deal is history - YHOO either gets bought out for around 20 bucks or flounders on its own around 10-12 bucks - market reaction today validates this with YHOO over 14 bucks and rising since ad deal officially scrapped

2008 Nov 05 10:32 AM

[Mike Havrilla:]

Thursday November 6, 7:49 am ET


NEW YORK (Reuters) - Shares of Yahoo Inc (NasdaqGS:YHOO - News) rose 5.7 percent to $14.72 before the bell on Thursday after the company's CEO said a deal with Microsoft (NasdaqGS:MSFT - News) remained its best option.


On Nov 01 06:33 PM grishick wrote:

> Seriously, give it up already... wasn't it made clear by Yahoo! management
> that they do not want to get acquired? What reason do they have to
> sell now? Smart ppl sell at high and buy at low, not the other way
> around. For Yahoo! to sell now would be really unsmart. If you long
> YHOO - stop watching the ticker, because in recession it is not going
> to be pleasant no matter, what you long. Check back in a couple of
> years.

2008 Nov 06 07:57 AM