Yahoo Shuns Potential Suitors

The New York Post was at it again Thursday morning, citing sources close to Yahoo (YHOO) who say that private equity firms have been aggressively reaching out to the company since its stock started trading below $24 a share. The article goes on to stir the pot further with a list of potential suitors ranging from AOL, AT&T (T), CBS (CBS), Microsoft (MSFT) and even News Corp. (NWS) who have shown interest in the past, and might make a move for the company at these depressed prices. The article also noted that co-founder Jerry Yang does not want to sell, though he may have to because the stock price is so low and he would be compromising his fiduciary duty to shareholders.

Of course, the takeover chatter is nothing new, but the story makes a great point of highlighting the frustration of investors who have waited for restructuring and reorganizing to produce fruitful results indicating that a tangible turnaround is under way. And that's probably at the heart of why rumors have abounded the past few days that Yahoo executives are planning job cuts of its nearly 14,000 workforce of at least a few hundred, to as much as a few thousand. Management has communicated a reorganization strategy but has yet to produce any results. In the end, the job needs to get done, but showing the market place that the company is serious about a turnaround and is making some meaningful cost cuts would definitely buy some time to satisfy shareholders that something is being done, and fend off takeover threats in the short term.

That is exactly what's happening here. How much time that is, and ultimately how the stock reacts will depend on fourth quarter results, how aggressive the layoffs are and what kind of guidance Yahoo issues to analysts when it reports earnings and holds a conference call with analysts on Jan. 29 to discuss its future plans.

For now, Yahoo shares are trying to stay out of the teens after hitting a 52-week low of $18.72 in Wednesday's trading session. On Thursday the was currently higher by $.84, or 4.20%, to $20.85 on moderate volume of 22.1 million shares.