May 6, 2008 10:49 AM PDT

Yahoo shares break through low zone

Posted by Dawn Kawamoto

Editors note: This post was updated Tuesday, May 6, at 2:16 p.m. PDT to reflect the market's close.

Yahoo shares broke through the low zone Tuesday, reaching as high as $26.25 to exceed the lowest level the shares were trading during the three-month period when Microsoft still had its buyout offer on the table.

But by the end of the regular trading day, Yahoo closed up 5.54 percent to $25.72 a share.

Coincidentally, that's the same exact spot Yahoo shares fell to during their lowest point in the three months that Microsoft's buyout bid was pending. Microsoft withdrew the bid over the weekend and on Monday, investors punished Yahoo, sending its shares down 15 percent.

On Tuesday, however, analysts say investors drove the stock up, based on renewed hope a deal will be struck between the two companies.

Wall Street soothsayers point to comments in the press from Yahoo executives and its chairman on Monday that seem to point to a "rapprochement with Ballmer," as noted in a blog by News.com's Dan Farber. And analysts say the public outrage factor from Yahoo's large institutional investors will go a long way in pushing the companies back to the table.

Here are some snippets from various interviews with the press that Yahoo executives and its chairman conducted Monday. A picture emerges of a company that would very much like to get back to the negotiating table and one where Yahoo wouldn't be so wedded to that deal-killer, errr, make that $37-a-share buyout demand:

Jerry Yang, Yahoo's CEO, said his company would listen "should somebody else come back someday and want to buy the company," according to a Bloomberg News article.

Sue Decker, Yahoo's president, said Microsoft never gave Yahoo a written confirmation of its sweetened $33 a share bid...noting, "The work our board did was to go around and talk to shareholders at the price Microsoft offered in writing, which was $31 a share," according to Sarah Lacy's Tech|ticker blog.

Roy Bostock, Yahoo chairman, is quoted as saying: "We said, considering all of these hard data, what we should do is say we think a fair value for the company is $37. It was not a take-it-or-leave it statement." He said Microsoft did not respond to that price other than to withdraw its offer," according to a report in The Wall Street Journal.

Analysts say such comments appear to signal Yahoo is making an attempt to get back to the negotiating table, in a face-saving manner.

"To say, 'we never got the $33 a share offer in writing' implies they don't want to beg," said Clayton Moran, an analyst with the Stanford Group. "A verbal offer should have been pretty solid, in this case. So, to say you never got it in writing, and therefore it's not a hard offer, potentially indicates you are open to further talks."

Moran noted that Yang's comments that Yahoo remained open to talks and Bostock's indication the $37 a share was not a take-it-or-leave it price point to Yahoo making the next price change in a rematch.

The $34 to $35 price range that a large slug of Yahoo's institutional investors are clamoring for seems to be a good point of reference for a next move by Yahoo.