Yahoo Stock Dips To Pre-Microsoft Levels
Aug 22nd, 2008 by Shaun Carter
Is stock in Yahoo! a screaming buy now that it has fallen to its pre-Microsoft offer levels?
I’m not sure what Yahoo has up its sleeves for the future, but Jerry Yang will have to come up with a solution (very quickly) to recover the share price or face losing his job at the company he co-founded. Personally, I think he should have lost his job already. The shareholders of Yahoo have lost Billions of dollars because Yang refused to do a deal at $33 per share as Microsoft had offered.
The advertising deal with Google, should it pass regulatory scrutiny, will surely bring a windfall to Yahoo but will also put them at the mercy of the number one search advertising leader. The arrangement will also undoubtedly boost Google earnings in a significant way.
Yahoo’s P/E ratio of 27 is still reasonable, since Google is in the 30’s. But I think there will be more pullback in Yahoo shares before any sort of rally could be had. Although a hostile or friendly offer from another company could boost shares quickly, and perhaps Yang and Friends won’t make the same mistake twice, otherwise it will be a long time before Yahoo shareholders see $33/share again.
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