Hear Ye! Since 1998.
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May 08

Yahoo stock plunges?

I just read this recent post on Kottke.org and felt compelled to point out the mis-analysis that Jason makes. A lot happened between Jan 31 and May besides the unsuccessful Yahoo bid. Microsoft’s drop in stock price from $32.60 to $29.08 over that period cannot be solely attributed to the Yahoo! bid – not when the prices that are being compared are over 4 months apart. If memory serves, there was a profit announcement that failed to meet analyst expectations recently and MSFT stock dropped 5%. Conversely, YHOO may currently be trading at a slight premium if there are still some people who think there is a lingering possibility of another bid in the future. The other tendency to take into account is that an acquiring company’s stock price will fall when it makes a bid and the target company’s stock price will rise to approximately the level of the bidder’s offer price. In light of all this, I think he’s inaccurate to conclude:

In still other words, in attempting to take Yahoo by force, they let an amount equal to Yahoo slip through their fingers. Why isn’t anyone writing about Yahoo’s amazing stock gains and Microsoft’s plunge?