Google Gains, Yahoo! Drops in Microsoft Deal Fallout

By Michael Santo
Editor-in-Chief, RealTechNews

No doubt the biggest story of last weekend was Microsoft abruptly walking away from their unsolicited deal with Yahoo!. And no doubt among the biggest stories of today are “what now?” and “what’s happening to their stocks?”

Yahoo! stock plummeted in pre-market trading, down 19.7% to $23.02 at market open on Monday. It’s recovered slightly to $24.06, down 16.1% at the time of this writing.

Meanwhile, Microsoft shares opened at $29.95, up 2.4% from Friday’s close, and is at $29.86 at the time of this writing, up 2.1%.

Google might be one of the the beneficiaries of the weekend’s events. It has been reported that Yahoo! may begin outsourcing its search ads permanently to Google as early as this week (recall that Yahoo!’s earlier trial with outsourcing was successful). Google shares are up to $596.01 or $14.72 (2.53%) at the time of this writing.

And what about Time-Warner, parent company of AOL, which has been widely rumored to be interested in a possible merger of AOL with Yahoo!? That stock is up $0.13 or .82%.

Just prior to the announcement of Microsoft’s advances, on Jan. 31st, Yahoo! stock was $19.18. Since then Yahoo’s shares have traded as high as $30.25 and as low as $25.72, prior to today.

Speculation? Are we about to see a precipitous drop? Right now it appears what Yahoo! CEO Jerry Yang has done since then has at least given investors a “higher than $19 / share” feeling about Yahoo!, as the stock has stabilized since today’s opening.

There’s no doubt, however, that Yang is on the hot seat. Yahoo! wanted $37 / share, Microsoft offered $33 / share. If Yang can’t convince investors of the same, it’s not going to be pretty. And in terms of “now what?” Yang was clear, particularly to employees, in a blog post yesterday. It’s time to work.

No one is celebrating about the outcome of these past three months… and no one should. We live and work in a competitive world and the Web is only going to get more competitive. Executing on our strategic plan is what matters most.

Is that plan good enough? Time will tell.