Yahoo's stock slides after Microsoft pulls bid

IDG News Service - Yahoo Inc.'s stock took a hit after the U.S. financial markets opened today, as investors reacted to Microsoft Corp.'s decision over the weekend to give up on acquiring Yahoo.

About an hour after the Nasdaq market opened, Yahoo's shares were trading at $24.22, down by $4.45, or almost 16%, from their Friday close of $28.67. At 2:30 p.m. Eastern, the stock had crept up to $24.67, down 14%.

Yahoo's stock got a boost after Microsoft Corp. announced its $44.6 billion acquisition bid on Feb. 1, rising from a close of $19.18 per share the day before to more than $30 at times in intraday trading, although its highest postbid closing was $29.98 on Feb. 14.

Yahoo's board formally rejected Microsoft's original bid on Feb. 11. Microsoft eventually walked away for good on Saturday, after its revised offer of $33 per share -- a $5 billion increase -- was still deemed too low. Yahoo was looking for a $37-per-share offer, Microsoft said on Saturday.

On Sunday, financial analyst Clayton Moran at Stanford Group Co. told IDG News Service via e-mail that Yahoo missed a good opportunity by rejecting Microsoft's offer. "We expect the stock to drop materially," he said.

So far, the market is proving him right.

An hour after the markets opened, Google Inc. shares were trading at $593.70 -- $12.41, or about 2%, higher than its close Friday; Microsoft shares were trading at $29.87, up 63 cents per share, or 2%. Though the failure of Microsoft's bid was clearly a disappointment to CEO Steve Ballmer, many industry observers said merging the companies' overlapping resources would have been tough to pull off.

"Yahoo plus Microsoft would have been a disaster -- the best and the brightest from Yahoo would have gone to Google, the culture clash would have been destructive, it would have put Microsoft back in the sights of the regulators," said Forrester Research Inc. CEO and President George Colony in a statement.