Microsoft plus Yahoo: Is it really over?

May.04, 2008 in Market Outlook

By John Letzing, MarketWatch

Last Update: 5:31 PM ET May 4, 2008

SAN FRANCISCO (MarketWatch) — With the Microsoft Corp. acquisition offer that
buoyed its stock now a thing of the past, and a more intimate relationship with
dominant rival Google Inc. on the horizon, Yahoo Inc. may face an uncertain
future.

While Microsoft (MSFT) on Saturday officially withdrew its bid, many analysts see
the move is little more than a negotiating tactic.

“Microsoft is playing hardball, but I think a deal will still happen,” said Piper
Jaffray analyst Gene Munster, “It’s like a couple trying to break up — they say
they are done, but you know they will get back together.”

Yahoo’s (YHOO) shares, which traded at more than $19 a share before Microsoft’s
bid was disclosed about three months ago, are widely expected to slide Monday.
The shares had risen sharply to $28.67 on Friday, amid reports that the company
was scrambling to reach an agreement with Microsoft.

And as the waiting game for Microsoft’s possible return to the negotiating table
begins, Yahoo also finds itself enmeshed in a possible search advertising tie-up
with Google (GOOG) that could both draw regulatory scrutiny and result in further
loss of its control of the market.

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