Yahoo’s Stock Spurts on False Rumors

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Yahoo’s stock jumped as much as 10 percent on Wednesday morning as rumors flew that it was on the verge of reaching a deal with Microsoft. The rumors, which people close to both companies unequivocally say are not true, seemed to gain legs when a broker sent around this e-mail to dozens of hedge funds:

“Employees at YHOO are said to have just received an internal memo, time-stamped at 8:00 PST, to expect a “major & historical announcement” today some time after 2pm PST. Sources are saying that “Yang has agreed to leave his post effective today and that YHOO is again in late-stage talks to sell the whole company to MSFT”. Deal is imminent and could be done by tonight. Price being mentioned is $17-$19.”

Jerry Yang, Yahoo’s chairman and chief executive is scheduled to speak Wednesday at the Web 2.0 Conference in San Francisco. But he is not planning to step down or make any other significant announcement related to a deal, the people close to the companies said.

While there are currently no talks going on between Microsoft and Yahoo, speculation remains rampant that Microsoft could once again approach Yahoo, given the steep fall in its stock price since the company rejected Microsoft’s bid in the spring.

Earlier Wednesday, Google abandoned a planned advertising partnership with Yahoo in the face of a looming antitrust challenge by the federal government.

Jeffrey Lindsay, an analyst at Bernstein Research, speculated in a report on Tuesday that if the Google deal failed, this would cause a “series of problems for Yahoo” and would lead to a renewed bid by Microsoft in 2009. He noted that Microsoft had “time on its side” and predicted a new bid of around $20 a share, instead of the $31 a share that Microsoft offered earlier this year.

From NewYorkTimes

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