Yahoo's stock: Back to pre-Microsoft levels
Posted
Aug 22 2008, 04:37 AM
by
Charley Blaine
Rating:
Here's something the top management of Yahoo may wish nobody noticed.
The stock is now lower than its $19.18 close on Jan. 31, the day before Microsoft launched its $33-a-share, $44.6 billion offer for the Internet company. (Microsoft is the publisher of MSN Money.)
Yahoo closed Thursday at $19.11. On Wednesday, it closed at $19.17.
While Yahoo can say it fought off Microsoft and a potential proxy fight from activist Carl Icahn, the victory has been costly. And not just because the company spent $36 million waging the fight.
Since peaking at $29.98 on Feb. 14, Yahoo shares have fallen 36.3%. Its market capitalization has dropped from $46.7 billion to about $26.6 billion. The stock is down 18% on the year and 56% from its close on Jan. 9, 2006, its high after the dot-com bust.
Founders Jerry Yang and David Filo saw the value of their holdings in the company jump $863 million and $584 million, respectively, between Jan. 31 and Feb. 14. All of those gains have disappeared. (But fear not. Filo's stake is still worth $1.53 billion; Yang's is worth $1.03 billion.)
Web measuring firm comScore reported Thursday that Yahoo’s share of the search market in the United States declined to 20.5% in July from 20.9% in June. In that period, Google’s market share rose by the same amount to 61.9%. Microsoft was third, with an 8.9% share of queries, down from 9.2% in June.
And it is still losing key executives to other companies.
The question that investors still with Yahoo (an awful lot of shareholders in January have sold) have to ask themselves is whether Yahoo can deliver enough innovation to generate revenue and profits to justify giving up a 72% premium to its Jan. 31 closing price.
To be sure, as The New York Times noted, Yahoo is trying new things. It has an ad deal with Google. On Wednesday, the company announced a partnership with Intel to bring interactivity to television sets. Last week, it rolled out new services for mobile phone developers and users.
But the announcements have done nothing for the stock price. Yahoo management insists that patience will pay off.
If there's any solace for a Yahoo shareholder, it's this: Google is down nearly 30% on the year. Microsoft is down 24% on the year and still down 16.6% since it launched its Yahoo offer.
