NEW YORK (Reuters) - Yahoo Inc's shares tumbled on Monday as investors punished the company for rejecting Microsoft Corp's $47.5 billion bid, though the fall was cushioned by hopes a deal may still be possible.
Shares of Yahoo fell as much as 20 percent in early Nasdaq trading before recovering some to trade at $24.47, still down 14 percent and far below the $33-per-share Microsoft offer.
"I think at $24, the stock's overvalued as a standalone Yahoo," said Mike Binger, a fund manager at Thrivent Financial, which owned both Yahoo and Microsoft shares. "I think $33 was fairly generous for Yahoo and if Yahoo won't accept it, they (Microsoft) did the right thing in walking."
Microsoft Chief Executive Steve Ballmer withdrew the bid on Saturday after talks collapsed, with Yahoo CEO Jerry Yang demanding $37 per share.
Shares of Microsoft rose 0.5 percent on investor relief that it was not overpaying for Yahoo, though concerns remained about how the software maker would develop its Web strategy in the face of a dominant Google Inc.
"We did like the idea of the Yahoo acquisition in the long run for Microsoft, but we did have reservations about how high a price they were willing to pay," said Dan Davidowitz, a portfolio manager at Polen Capital Management, which owns Microsoft and Google shares. "I'm not necessarily certain that the Yahoo deal is completely off the table."
One clear winner from the collapse of Microsoft-Yahoo talks is Google, whose shares rose 2 percent. A deal would have been one of the biggest mergers in the technology sector and may have threatened Google's steady expansion on the Web.
"The terminated Microsoft-Yahoo negotiations eliminate the risk for now of a stronger online advertising competitor to Google," Stifel Nicolaus analysts George Askew and Scott Devitt wrote in a research note.
Link: Full Story @ Reuters
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