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MSFT-YHOO: Yahoo Shares Up Again; Market Doubts Story Is Over

Yesterday, the market was already voicing its skepticism that the Microsoft-Yahoo (NSDQ: YHOO) saga was totally over — and that was before Jerry Yang’s no-doors closed media tour. And today, shares of Yahoo are once again catching a bid, trading up over 4 percent to above $25.30 — note that it’s been volatile, and could change at any point. But if the withdrawal was just a bargaining ploy, Microsoft (NSDQ: MSFT) is trying hard not to give off that impression. Even Windows Live general manager Brian Hall told investors that the company was done with its bid and is committed to growing organically, according to And he seemed to downplay the benefits of acquiring Yahoo, saying that the acquisition would have helped in areas like email and IM (true, but also ads).

Also from Yahoo’s perspective, President Sue Decker confirmed to Sarah Lacy at its TechTicker channel, that the final offering price from Microsoft was vague, and that the board never received an official offer above the initial one. However, the statement doesn’t come off in a way to suggest that if only Yahoo had actually received a real offer around there, it might have agreed to a deal.

Meanwhile, Reuters reports that a planned ad deal between Yahoo and Google (NSDQ: GOOG) — which just last week was made to sound like an inevitability — might not be quite so done. Now that Yahoo doesn’t have Microsoft breathing down its neck, the urgency to use a partnership as a poison pill has been reduced. And speaking of this strategy, law professor Stephen Bainbridge offers an analysis of this question: can a company actually use a partnership agreement to thwart a takeover? It’s not cut and dry, but a key question is whether the agreement was made as part of a long-term business strategy, or whether the move was clearly designed to prevent a takeover. Certainly the idea of outsourcing search ads to Google had been talked about for some time… but Microsoft’s bid definitely brought urgency to this question.

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