Talk about a nerve-wracking couple of days for Yahoo investors, especially the ones who flooded into the issue on Friday on word that Microsoft was increasing its offer to $33 a share.
Yahoo shares jumped 10 percent on that news, even though over and over again, we mentioned on the air as this news was breaking that despite an offer increase, there was still a chasm between Microsoft's bid and Yahoo's ask of $37.
Of course, now we know that Microsoft is abandoning its bid, and the speculation is all over the Street as to just how low Yahoo shares will plunge on the news.
I spoke to a source very close to the highest echelons of Yahoo's executive team who worried these shares could touch $15 or $17 this morning. Citigroup's Mark Mahaney is out with a note today suggesting they'll close the day down to only $26. Other sources say look for a steep decline to $20 or so before a late day recovery.
Across the pond in Frankfurt, the stock fell 20 percent to 14.55 euros ($22.50) in midday trading.
Either way, no matter where they go, they won't touch $33, and they certainly won't go anywhere near Yahoo's own self-valuation of $37, and that's really all that matters. Microsoft upped the ante to a 70 percent premium and Yahoo sources told me Sunday, in no uncertain terms that the offer was "low ball" and "opportunistic" with Microsoft taking advantage of a steep slide that took place in a very narrow period of time.
I don't buy it.
The steep slide has been going on for the better part of three years. If Microsoft wanted to be truly "opportunistic," the premium it offered would be substantially below 70 percent. And yet Yahoo's board voted unanimously against such a deal.
I haven't talked to a single Wall Street analyst who covers either company who isn't stunned that this deal fell apart. And many of you seem to agree: Mary Ellen writes in that "Microsoft and Yahoo both screwed the Yahoo shareholders. Microsoft probably rethought the acquisition after the market indicated a lack of enthusiasm for it ... Anybody who shorted Yahoo is going to make a ton of money. Those of us who own the stock are going to get creamed."