The Yahoo Saga Deepens

Apr 10, 2008: 11:43 AM CST

Recently, to counter Microsoft’s (MSFT) offer to acquire Yahoo (YHOO) at $31 per share, Yahoo is now in talks with both Google and AOL Time Warner (TWX) to determine if a more favorable offer can be generated.

According to a Business Week article entitled Yahoo’s New Strange Bedfellows, “Yahoo is showing just how far it’s willing to go in efforts to fend off an unwelcome takeover attempt from Microsoft—or at least extract a few more dollars from the software giant.”

Not to be outdone by this development, “Microsoft is in talks with News Corp (NWS) to make a joint offer for Yahoo.”

What would the new potential Yahoo deal entail?

“Step one in Yahoo’s plan is a freshly announced test to team up with Google (GOOG) to make its Web-search business more profitable. Moreover, Yahoo is discussing a possible combination of operations with Time Warner’s AOL (TWX). Under terms being considered, Time Warner would merge much of AOL’s operations with Yahoo”

Moreover “pairing with Google could give Yahoo a way to cut costs and boost revenue—and demonstrate that it has options besides acquiescing to Microsoft.”

It appears to be a story that keeps getting interesting.

Previously, I addressed earlier developments in this topic in my post “Charting Microsoft and Yahoo” and here I wanted to update developments, and throw in two additional stock charts that are now part of the ongoing saga of acquisition and strategic compromises.

First, let’s look at Time Warner (owner of AOL – America Online):

The stock has positive momentum going into a potential right triangle consolidation pattern, forming as the stock languishes beneath its two key moving averages. The stock is currently in a confirmed downtrend and may be forming a reversal pattern. Recall that companies offering to buy other companies often experience lower share prices as the deal develops, while the stock of the company being acquired frequently rises (Yahoo’s stock is up for the day, after an overnight gap).

Finally, let’s look at impressive stock Google (GOOG):

Google is slowly ‘creeping’ higher with extremely shallow retracements, which is a sign of strength. There has been a lengthy positive momentum divergence which is currently resolving as expected. Price is trapped beneath its two key moving averages, but is finding support from the rising 20 period. A break above the 50 (blue) average and above ’round number’ resistance at $500 would be a boon for the bulls in this formerly high-flying stock. Google has significant support beneath $425.

Will there be any new companies to join this ongoing story? And what will the effect be for the overall market as investors continue to pay more attention to these developments? Time will tell!

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  1. Buy » The Yahoo Saga Deepens Says:

    […] Afraid to Trade.com Blog wrote an interesting post today on The Yahoo Saga DeepensHere’s a quick excerpt Recently, to counter Microsoft’s (MSFT) offer to acquire Yahoo (YHOO) at $31 per share, Yahoo is now in talks with both Google and AOL Time Warner (TWX) to determine if a more favorable offer can be generated. According to a Business Week article entitled Yahoo’s New Strange Bedfellows, “Yahoo is showing just how far it’s willing to go in efforts to fend off an unwelcome takeover attempt from Microsoft—or at least extract a few more dollars from the software giant.” Not to be outdone by th […]