Friday the 13th has been lucky for some, unlucky for others so far. Microsoft (MSFT, $29.32, up $1.08) and Google (GOOG, $5754.75, up $21.80) are trading higher while Yahoo (YHOO, $22.29, down $1.23) continues to get pounded. Microsoft and Yahoo failed at yet another attempt to get together forcing Yahoo to strike a deal with Google to sell search ads on its site.
The price targets and upgrades and downgrades on Yahoo and Google are in full force today but I’m not even going to mention them. I’ve mentioned that Google would ultimately be the big winner out of all of this and that appears to be the case. Microsoft’s bid reportedly was for $35 a share or $50 billion and it’s clear Yahoo just doesn’t want to merge with Microsoft.
The deal between Google and Yahoo was a big blow to Microsoft but it has once again created some interesting option plays. Yahoo fell 10% yesterday and the market is questioning the deal with Google. Yahoo is still trading above $19 which is where the stock was at before Microsoft made its original $45 billion offer, but far below the $33, now $35, a share Microsoft offered before finally leaving the table.
The deal Yahoo made with Google also leaves Carl Icahn in a pinch. The “corporate raider” had big plans to get Yahoo and Microsoft together but is now left with few apparent “options”. Remember, he owns 50 million shares of Yahoo at an average cost of about $25 a share. His losses are growing and he now stands to lose money if he can’t come up with another plan and decides to cut his losses.
I’m not sure where Yahoo goes from here but there seems to be some options traders buying the July 25 calls (YHQGE, $0.59, down $0.38) before the weekend in hopes of a quick trade and exit for next week. Yahoo had originally traded higher on the Google news last night and some are trying to play a possible small rebound in Yahoo. The Google July 610 calls (GOOGB, $12.90, up $3.80) are also getting some players.