It was in early February that Microsoft offered Yahoo a stock and cash bid totaling $44.6 billion. The resulting news skyrocketed Yahoo’s share price 48%.
Hmm, I wonder how much the share price will drop after it was announced that Microsoft backed away from the deal Saturday? This is despite a last pitch effort to sweeten the offer by increasing Yahoo’s share price from the initial bid of $31 to $33. The Yahoo execs wouldn’t budge from $37.
I also wonder if this is yet another coy tactic by Microsoft to rile the Yahoo shareholders into a murderous frenzy. You have to hand it to Microsoft, this parting rivals Rhett Butler’s walk out on Scarlett O’Hara with the very dramatic, “Frankly my dear, I don’t give a damn”.
According to an analyst quoted from this Bloomberg article, it is estimated that the Yahoo share price will drop $8, or 28 percent when trading resumes Monday. Analysts are sometimes hit and miss but this can’t be considered good news for Yahoo shareholders. This is especially bad for those who wanted to play the buy on rumor, sell on news game.
As my previous article explained, this buy on rumor, sell on news axiom has been one of the most regurgitated sayings in the finance industry. It will leave those looking for a quick buck disappointed.
Let’s face it, when these rumors hit our pedestrian ears, it’s not rumors anymore. It’s news because we probably read it/watched it from mainstream media. And how often do these “rumors” come true? All talk and no action. What a tease.
Who knows, this still might be posturing from Microsoft but this is too much of a roller coaster ride for my liking. And the screaming I hear are from the Yahoo shareholders in the front caboose.
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