Filed under: Microsoft (MSFT), Yahoo! (YHOO), Options

Yahoo (NASDAQ: YHOO) is recently down 66 cents to $27.70.

Microsoft (NASDAQ: MSFT) sent a letter to YHOO’s board of directors, setting a three-week deadline for moving forward with its proposed acquisition of YHOO. MSFT also threatened to lower its bid. MSFT announced on Jan. 31 an offer for YHOO payable in $31 cash or 0.9509 per share of MSFT.

YHOO responded to MSFT by reiterating its belief MSFT’s takeover bid “substantially undervalues” YHOO. YHOO is expected to report Q1 EPS in late April.

Jefferies & Co says: MSFT’s “hard ball negotiating tactic to force the Board’s hand. We believe that it will likely work considering YHOO’s alternatives are weak.”

YHOO May option implied volatility of 58 is above its 26-week average of 42 according to Track Data, suggesting larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Share This

This entry was posted on Wednesday, April 9th, 2008 at 5:09 am and is filed under Stocks News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.