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San Francisco: Yahoo Inc. Chief Executive Jerry Yang is convinced that the company he started in a Silicon Valley trailer 14 years ago is worth more than the $47.5 billion that Microsoft Corp. had offered for the internet pioneer.
Now he may only have a few months to convince Wall Street that his snub of Microsoft's takeover bid was a smart move, and if he can't, analysts won't be surprised if Yang is either replaced as CEO or forced to consider accepting a lower offer if Microsoft comes knocking at his door again.
"This squarely puts the pressure on Jerry Yang to deliver results and shareholder value," Standard & Poor's equity analyst Scott Kessler said. "You are going to see a lot of shareholders just throwing in the towel because they are going to realise it's going to take a while for the stock to get back to where it was Friday."
The backlash is expected to begin on Monday when Kessler and other analysts believe Yahoo's stock price will surrender most, if not all, of its 50 per cent gain since Microsoft made its initial offer on January 31. The anticipated sell-off would leave Yahoo's market value hovering around $30 billion.
Meanwhile, most analysts believe Microsoft's stock price will rise on Monday. The shares had declined 10 per cent to $29.24 since the bid, reflecting concerns that the proposed marriage would turn into a complicated mess that would enable Google Inc. to grow even stronger.
Yahoo shares finished last week at $28.67, slightly less than the $29.40 per share that Microsoft was offering before Chief Executive Steve Ballmer agreed to raise the offer to $33 per share in a last-ditch effort to get a deal done.
Disillusioned shareholders are bound to question whether the rejection of Microsoft's sweetened offer was driven more by emotion and ego than sound business sense.
Yahoo shares are unlikely to immediately fall back to their $19.18 pre-bid price, partly because some investors may still be holding out hope that the software maker will renew its takeover attempt if Yahoo continues to struggle.
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