Microhoo Aftermath, Day 2: It's Not Over 'Til It's Over

So let’s take a look at how the major players are doing on the second day of trading after Microsoft’s (MSFT) decision to walk away from its bid for Yahoo (YHOO).

Yesterday, neither MSFT nor YHOO shares behaved quite as expected. MSFT, which in theory was going to rally on Monday, actually lost ground. There were two reasons for this. One, there was considerable speculation that the company could at some point try again. And two, there are worries about what approach the company takes instead to bulk up its presence on the Web.

YHOO shares, meanwhile, fell less than expected. Again, two reasons come into play. One, there is anticipation of a search advertising outsourcing deal with Google (GOOG). And two, once again, there is the expectation that MSFT could eventually try again.

• Yahoo this morning is up 71 cents, or 2.9%, to $25.08. Yahoo execs have given a series of interviews over the last 24 hours; CEO Jerry Yang has taken the stance that the company is still willing to sit down with Microsoft if they have something new to offer. Yang has been perceived to be in opposition to a deal; but he seems to have softened his stance. Meanwhile, the Wall Street Journal is reporting that some institutional investors are severely vexed at the way Yahoo handled the discussions.
• MSFT is up 15 cents, or 0.5%, to $29.23.
• GOOG is succumbing to a bit of profit-taking; the stock is off $5.10, or 0.9%, to $589.80.

Comments

[Lymon802]

I suggest that Microsoft bid again and offer $32 good for two weeks, which they announce will be followed by another offer of $31 good for two weeks, which they announce will be offered $30 good for...

This would give Yahoo's shareholders something to think about and let the pressure build!

[Tom B]

Eric: Outside the seekingalpha "Pundit-verse", people understand that tying two rocks together doesn't make a boat. Yahoo is actually a stronger company than MSFT, on technological merit. Yahoo's got Flickr and Zimbra, in addition to a zillion "eyeballs" every day. What's MSFT got? Vista? Ahem--see my point? They've got NOTHING except a big wad of illegally obtained $$$$ from their Golden (monopoly) Years. They don't even have a tech-savvy CEO. It's like when Pepsi-guy Sculley took over Apple and nearly drove it into oblivion. WOULD have driven Apple to oblivion if they hadn't had the 10-plus-year technological advantage over MSFT.

No, let Yahoo be Yahoo. Never a "buy", IMHO. Not an innovation powerhouse, by any means. But stronger on its own than diluted with Redmond droids.