Yahoo: Maybe a Takeunder?

Well, Yahoo (YHOO) holders got one thing they wanted - Jerry Yang’s head on a silver platter. But whether they get the other thing they want - a new bid from Microsoft (MSFT) at a considerable premium to the current price - is no sure thing.

This morning, Wunderlich Securities analyst Martin Pyykkonen repeated his Sell rating and $10 target price on the shares. The analyst regards Yang’s departure as a step in the right direction, but says he is “not convinced” it will lead to an imminent takeover attempt by Microsoft. And even if they do bid, he adds, there is likely no reason to hurry. Here’s his theory:

• Yahoo’s business is now worth less to Microsoft than it was earlier in the year, given the company’s weakened competitive position in search advertising versus Google.
• He thinks an outright bid for the whole company is less likely than some sort of advertising search partnership.
• Even if they are interested in bidding for the whole thing, Microsoft has no reason to rush: if the Internet advertising business continues to weaken into 2009, he says, “Microsoft might be able to acquire all of Yahoo at or below the current market value.”

Meanwhile, he also asserts that in terms of a new CEO, the company would be best served by choosing a traditional media executive with Internet savvy. “The short list of such candidates is very short, and [it] may be a challenge for Yahoo to attract the ideal candidate, assuming the company plans to remain independent.”

With yesterday’s post-Yang-era rally now faded, YHOO today is down $1.77, or 15.3%, to $9.79, erasing yesterday’s 92-cent bounce and then some.

Comments

[Jow Bloggs:]

At this rate Yahoo can use its cash pile to buy back its own shares, go private and get out of the analysts glare. Maybe then they can concentrate on the internet and their users without having to worry about the money men raking through things they dont understand and trying to put a value on it.

2008 Nov 19 05:12 PM

[Tom B:]

That sounds like a good idea.


On Nov 19 05:12 PM Joe Bloggs wrote:

> At this rate Yahoo can use its cash pile to buy back its own shares,
> go
private
> and get out of the analysts glare. Maybe then they can
concentrate
> on the internet and their users without having to worry
about
> the money men raking through things they dont understand and
trying
> to put a value on it.

2008 Nov 20 11:02 AM