Stock Watch

Yahoo! board of directors has decided to reject Microsoft’s bid to buy Internet giant Yahoo for US $44.6 billion as per report of Wall Street Journal. Microsoft offered $31 per share for Yahoo. Due to recent weakness in Yahoo stock, Microsoft tried to capture majority stake in Yahoo at an attractive price. However, officials at Yahoo expect higher valuations in order to sell the company to Software major Microsoft. Yahoo may not consider any offer less than $40 per share. If Microsoft tries a hostile takeover of Yahoo, it may cause problems with approval from regulators. Microsoft may face issues as Yahoo management will try to convince that the deal is anticompetitive. Microsoft has been trying to compete with Search Engine major Google in various fields. Microsoft couldn’t achieve success as Google managed to keep a higher percentage of online search and online advertising with Google Adwords. Yahoo has also tried to offer search advertising solutions to online advertisers. The combined user based of Microsoft and Yahoo will again be smaller compared to Google’s share in online advertising. Google reported a lower than expected results in last quarter. Yahoo’s board is also considering partnership with Google for search advertising platform. The stock price of Yahoo has seen a steady rise after offer from Microsoft. The Yahoo stock was trading at its 52-week low during January end this year. The stock touched a 52-week low of $18.58 on 30 January, 2008. However, on 1 February, the stock closed much higher at $ 28.38. On 8 February, Yahoo stock closed at $ 29.20. The price offered by Microsoft was good at the time of offer. But now that the stock has seen an appreciation in stock markets, the deal may not sound that attractive for Yahoo shareholders. The report from WSJ hasn’t disclosed the name of the information source, but has said that the person is close to the board of directors of Yahoo!