RealTime IT News

Yahoo! Merger Rumors Rampant

The price of Yahoo! stock jumped substantially in trading in Europe and Japan overnight as speculation increased that the AOL/Time Warner merger may be putting pressure on the directory and e-commerce site to find a partner.

Both Viacom and Disney were mentioned by various analysts as possible suitors. A Yahoo! corporate spokesman told internetnews.com this morning that "Our standard statement is: We don't comment on rumor or speculation."

In Tokyo, Yahoo Japan Corp. shares jumped 13 percent on merger speculation. Viacom already owns a third of Yahoo!'s Japanese unit.

In the United States, the stock opened at $31 after closing yesterday at $30.25. It climbed to $31.37 in early trading. The stock is well down from its 52-week high of more than $250 a share.

"Yahoo needs other revenue sources to compete against its rivals such as Microsoft's MSN and America Online," Kota Nakako, analyst at UBS Warburg Japan Ltd., told Bloomberg News. "It's possible Yahoo is in talks with major media companies, including Viacom."

Meanwhile, Yahoo! shares jumped 10 percent in European trading.

Earlier this week, Yahoo reported earnings that were better than expected, but warned of a slowdown in advertising revenue and said it wouldn't meet expectations for the first quarter of 2001.

"Since Yahoo lost 80 percent of its valuation, it has become a target for media companies who want to expand their distribution network," Nicole Gindre, media analyst at Credit Lyonnais in Paris, told CBS Marketwatch. "There should be some speculative interest in investing in Yahoo."