If logic prevails, Microsoft stock may be in for quite a rebound on Monday. After announcing an offer to buy Yahoo! for 44.6 Billion on February 1st, Microsoft’s stock went into a steep decline. Ending January 31st at $32.60/share, the stock closed yesterday at $28.56/share, a drop of roughly $4 or ~12%.
Its clear that investors either thought Microsoft offered too much for Yahoo! or that they were not confident in Microsoft’s ability to efficiently merge the two companies into something that would be worth more than the sum of their parts.
Assuming investors were generally uneasy about the $44.6 billion dollar offer, now that it has been rejected by the Yahoo! board, will the stock rebound to its pre-offer levels of $32.50? Was the offer a damned-if-you-do, damned-if-you-don’t scenario? If the deal was accepted, their stock may have suffered due to additional unease about the merger, if the deal is rejected it highlights Microsoft’s continued weakness in the online content and advertising sectors and it may open the door for Google to side up with Yahoo to gang up on Microsoft.
Monday should be very interesting. The question is, if you could buy Microsoft today at $28.56/share, knowing that the offer was rejected by Yahoo! and the market is not yet open, would you? Tough to say…the market seems pretty irrational lately, I wouldn’t be surprised if Microsoft’s stock price languishes or even declines due to the Yahoo! rejection.
on Feb 11th, 2008 at 8:18 pm
Well, Microsoft is down $0.25/share today. That makes sense if the market thinks MS is going to come back with a higher offer. If the street didn’t like the offer at $31/share, they really aren’t going to like it at $35, $40 or $50/share.
Should be an interesting couple of weeks for Microsoft (MSFT), Yahoo (YHOO) and Google (GOOG) stock.