Yahoo's stock slides as US markets open

Investors react to Microsoft's decision to give up on acquiring Yahoo

As expected, Yahoo's stock took a hit after the US financial markets opened Monday morning, as investors react to Microsoft's decision over the weekend to give up on acquiring Yahoo.

About an hour after the Nasdaq market opened, Yahoo's shares were trading at US$24.22, down by $4.45 or almost 16 percent, from their close on Friday at $28.67.

Yahoo's stock got a boost after Microsoft announced its US$44.6 billion acquisition bid on February 1, rising from a close of $19.18 the day before to more than $30 at times in intra-day trading, although its highest post-bid closing was $29.98 on February 14.

Yahoo's board formally rejected Microsoft's original bid on February 11. Microsoft eventually walked away for good on Saturday after its revised offer of $33 per share, a US$5 billion increase, was still deemed too low. Yahoo was looking for a $37 per share offer, Microsoft said on Saturday.

On Sunday, financial analyst Clayton Moran from Stanford Group Company told IDG News Service via e-mail that Yahoo missed a good opportunity by rejecting Microsoft's offer. "We expect the stock to drop materially," he said.

So far, the market is proving him right.

An hour after the markets opened, Google shares were trading at US$593.70, $12.41 or about 2 percent higher than its close Friday, and Microsoft shares were trading at $29.87, up by $0.63 or 2 percent. Though the failure of Microsoft's bid was clearly a disappointment to CEO Steve Ballmer, many industry observers thought that the merging of the companies' overlapping resources would have been tough to pull off.

"Yahoo + Microsoft would have been a disaster -- the best and the brightest from Yahoo would have gone to Google, the culture clash would have been destructive, it would have put Microsoft back in the sights of the regulators," said Forrester CEO and president George Colony in a statement.

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