Yahoo shares tumble in German trading


Bloomberg

NEW YORK/DALLAS — Yahoo! Inc., the Web company that spent three months fighting a takeover by Microsoft Corp., tumbled in German trading Monday after the software maker scrapped the bid because executives failed to agree on the price. Citigroup Inc. and ThinkPanmure LLC analysts cut their ratings on Yahoo’s stock to “sell” after Microsoft withdrew its bid.

Microsoft said this weekend it walked away when Yahoo demanded US$37 a share after the US$44.6 billion bid was raised by about US$5 billion to US$33 a share. The move leaves Yahoo Chief Executive Officer Jerry Yang to prove he can revive sales and the share price by keeping the company independent. Sunnyvale, California-based Yahoo, owner of the No. 2 search engine, fell 32 percent on the Nasdaq in the year before Microsoft’s offer. Bigger rival Google Inc. expanded revenue more than three times faster than Yahoo last quarter. Yahoo fell as much as US$7.55, or 26 percent, to the equivalent of US$21.12 in Frankfurt Monday, from the close of US$28.67 in the U.S. on May 2. The stock traded at US$22.72 as of 12:10 p.m. in Germany Monday.

Redmond, Washington-based Microsoft, the world’s biggest software company, rose US$1.21, or 4.1 percent, to US$30.45 from the U.S. close of US$29.24 last week. Google added 3.7 percent to US$602.68 in German trading from the May 2 close of US$581.29 in the U.S. “Yahoo’s stock is going to crater, and Yahoo shareholders are going to go bang on everyone’s head and say, ‘How does this benefit me?’” said Richard Williams, an analyst in Short Hills, New Jersey, at Cross Research who advises investors to hold on to Microsoft shares and doesn’t own any. Laura Martin, an analyst at New York-based Soleil Securities Corp., estimated Yahoo shares will fall US$8, or 28 percent, Monday as Microsoft’s withdrawal, combined with concern about the economy and the advertising market, weigh on investors. The stock had gained 49 percent in Nasdaq Stock Market trading since Microsoft’s bid on Feb. 1.