We've been hearing about a search tie-up between Microsoft Corp. (NASDAQ:MSFT) and Yahoo! Inc. (NASDAQ:YHOO) for so long now that it'll be a big relief when a deal is actually announced. But it may be some time yet.
Sanford C. Bernstein & Co. analyst Jeffrey Lindsay writes that recent comments by Yahoo! CEO Carol Bartz suggest that any kind of Microsoft deal is unlikely this year. At a Bank of America confab this week,
Bartz quipped Yahoo! would be better off never having heard of Microsoft.
In a Friday research note, Lindsay wrote:
"We believe that Ms. Bartz has persuaded the board to give her time to improve Yahoo!'s operations and this will take two to three quarters to play out. Given the limited long term upside for Yahoo! as a stand-alone entity, however, we think the pressure to explore transactions will resurface in 2010, and the board will eventually force Ms. Bartz to reconsider."Lindsay increased his target price for Yahoo! shares to $18, from $13, but not really because the company's prospects are improving greatly. Rather, he expects a general updraft in the online ad space to carry Yahoo! shares upwards, and, essentially, the company's stock might just be through getting pummeled.
"We believe all of the bad news for Yahoo! is already factored into the stock price," he wrote. -
Olaf de Senerpont Domis
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