Yahoo Plunges 13% on Heavy Volume

123jump.com Staff
12 Jun, 2008
New York City

Yahoo! Inc ended its formal talks with Microsoft after both parties could not decide on a price. Microsoft has withdrawn its offer of $33 per share. Both parties also could not agree on using Microsoft search technology on Yahoo website network. Yahoo and Google are likely to announce a search pact that will facilitate search on Yahoo websites as early as today.

[R]10:00AM New York – Yahoo plunges 13% after it ended talks with Microsoft and plans to agree on pact for search technology with Google.[/R]

Yahoo! Inc ((YHOO)) stock fell 13% on a sharply higher volume of 76 million shares after it broke-off its talks with Microsoft. Microsoft, according to a report first reported in the Wall street Journal website, is not prepared to pay $33 per share.

Yahoo is likely to announce a deal with Google to use its search technology after a separate discussion on the search business with Microsoft could not reach an agreement. The end of talks comes after five months of Microsoft pursuit of Yahoo which the company management resisted.

Yahoo ((YHOO)) stock plunged 13% or $3.44 to $22.68, Google stock ((GOOG)) rose $2.80 to $548 and Microsoft ((MSFT)) stock gained 93 cents to $28.05.

Lower than expected rise in unemployment claims and relatively strong retail sales lifted market averages. Lehman replaced its chief executive officer and chief operating officer after stock lost nearly one third of its value in one month. Lehman fell at the opening. South Africa raised its interest rate by 0.5% to 12% as inflation surges above 10%. Brazil, India and Russia have raised rates and Indonesia and Philippines are likely to increase rates.

Unemployment claims at the end of last week rose 25,000 to 384,000 and the 4-week moving average was 371,500, increase of 2,500 from the prior week’s revised average of 369,000. The advance seasonally adjusted insured unemployment rate was 2.4% for the week ending May 31, an increase of 0.1 percentage point from the prior week's unrevised rate of 2.3 percent.

Retail sales in May rose 1% from April to $385.4 billion, an increase of 2.5% from a year ago. Total sales for the March through May 2008 period were up 2.6% from the same period a year ago. The March to April 2008 percent change was revised from -0.2% to 0.4%.

InBev NV, the Belgian and Brazilian beer company made an unsolicited offer for Anheuser Busch for $65 per share or $46.6 billion. The offer is at 14% premium from the closing price on Wednesday or 18% from its peak price in October 2002. The combined company will have revenue of $36 billion and Anheuser Busch with nearly 50% of the U.S. market will significantly add to its global footprint.

World market update

In Tokyo Nikkei 225 Index closed lower 294.88 or 2.08% to 13,888.60, in Hong Kong Hang Seng index decreased 303.74 or 1.30% closed to 23,023.86. In Australia ASX 200 index lower 138.10 or 2.53% to close 5,329.20. In Malaysia KL Composite index decreased 3.74 or 0.30% closed to 1,225.54.

In South Korea Kospi Index increased 42.31 or 2.37% to close at 1,739.36, in Thailand SET index closed lower 0.86 or 0.11% to 790.80 and Indonesia JSE Index edged increased 34.22 or 1.44% to 2,409.01. Sensex index in India increased 64.88 or 0.43% to 15,250.20.

The CAC 40 advanced 0.23% to 4,671.48. In Germany the DAX 30-index gained 46.86 points or 0.70% to 6,697.12. Shares in Switzerland climbed as the Swiss Market index gained 45.09 points or 0.63% to 7,212.39. The FTSE 100 climbed 39.30 points or 0.69% to 5,762.60.