A Word To The Wise On Yahoo Rumors

Yahoo Center
Yahoo Center

When it comes to Yahoo and its stock, yesterday was a fast and furious kind of day, and while whip lashed traders lick their wounds and wonder what happens next, the action serves as an important lesson for investors. And not just investors in Yahoo and Microsoft .

Lesson: Consider the source.

I'm not saying that in a flippant kind of way, and it isn't a slap at the good folks at TechCrunch. Or any blogs for that matter. This is one, too, after all. There but for the grace of rumors go many of us. I'm sure that TechCrunch, the blog backed by Michael Arrington, didn't eschew the norms of quality reporting, and didn't recklessly float a rumor without feeling confidence in the sources from which the news came.

Blogs are not necessarily the sources I'm speaking of when I suggest, consider the source. I'm talking about the sources themselves. Those that come up with this stuff in the first place and then contact outlets trying to get some traction for it. I'm always asking what people stand to gain or lose by "leaking" information to me. And with Yahoo down near $20, losing seems to be far surpassing gaining. Which makes a rumor of renewed Microsoft talks all the more questionable as investors try to come up with new ways to prop up these shares.

Blogs don't necessarily subscribe to the same rules and regulations more conventional journalists do. Their world works far faster than traditional media. They can afford to be snarky, and subjective, and inject opinion where traditional news outlets won't. I don't presume to suggest that all media doesn't have a bias of some kind or another, or that we don't inject opinion, masked as "analysis" to move a story along or to generate some "heat" in the story's coverage. I share opinions here, from time to time, to fill out the coverage I offer on the air and I think it can be pretty effective.

But blogs are different. They have a different mandate. A different foundation. They tend to be a far freer form of discourse between readers and posters. And far more democratic than the gate-keeping conventions of traditional media. That's good and bad. Everyone gets a voice. That's good. It's just that I'm not sure that every voice deserves the same level of volume, even though they all get it, no matter their expertise, and in the case of business stories, no matter their investment positions in the companies they're talking about.

Which brings me to yesterday's feverish coverage of Yahoo, and rumors that talks had suddenly resumed with Microsoft about a buy-out of the entire company. Speculation about this has been rampant online. The difference yesterday: an established wire service, Reuters, picked up the story as "news," and it spread like wildfire. Just because a rumor is out there, being discussed on a blog, doesn't necessarily mean it should automatically rise to the level of conventional coverage, without those conventional journalists looking into it themselves. Which is what I was asked to do when I was asked to get on the air to discuss it.

I knew that the moment I went on the air to address this, the already 9 percent pop in Yahoo shares could double because no less a news organization than CNBC was lending credibility to a story that may actually have no foundation in fact. So I asked for a few minutes to see what I could come up with and of course, everyone here thought that was a good idea. As long as I could do it quickly. I spent those few minutes calling and texting the people I thought would be in the best position to comment, one way or another, on this "news." Didn't take long to find out that Microsoft's position hadn't changed, that no all-out acquisition was back on the table, and that Microsoft has been, and continues to be, interested in buying Yahoo's search business. No change. Nothing.

I went on the air moments later to throw some cold water on the story. Such is the power and reach of CNBC. Soon after, Reuters reported our headline. Same goes for Dow Jones. And shares settled down. Even though the longs on Yahoo's message board had a field day with me, at my expense.

None of this is to say that a deal with Microsoft and Yahoo won't eventually happen. Sure it could. Could. But as of yesterday, there was no new "news" to report, and yet a bunch of "new news" got reported anyway. Rumors on the blogs aren't news. Are they worth discussing? Sure. Debating? Absolutely. Ruminating? Definitely. But buyer and seller beware when message board fodder becomes the lynchpin of a news story.

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