Yahoo stock plunges? On Jan 31, the day before Microsoft offered $31/share for Yahoo, YHOO was at $19.18/share (market cap: $26.4 billion) and MSFT was at $32.60/share (market cap: $303.6 billion). At the close of trading today, YHOO closed at $24.37/share (market cap: $33.5 billion) and MSFT was at $29.08/share (market cap: $270.8 billion). In other words, the Microsoft offer increased the value of Yahoo! Inc. by more than $7 billion and decreased the value of Microsoft Corporation by almost $33 billion. In still other words, in attempting to take Yahoo by force, they let an amount equal to Yahoo slip through their fingers.
Why Yahoo Shares Lost Only 15%: The bottom didn't fall out of the stock after Microsoft yanked its bid. One reason, says CEO Yang: "We have more alternatives" than before the offer [...]
Chief among the options remains the possibility that Microsoft's decision to walk away is a high-stakes negotiating tactic intended to tank Yahoo's stock price and force Yang back to the bargaining table. Sandeep Aggarwal, an analyst with Collins Stewart, estimates that as much as $4 of Yahoo's stock price today can be attributed to investor hopes for a Microsoft deal.
