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LA Times Stirs Yahoo Rumors

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The same article that led to Google and Wal-Mart denying a Google PC distribution deal was in the works has also given a boost to options trading on Yahoo after claiming Yahoo dismissed a Microsoft takeover bid of $80 billion as too low.

LA Times Stirs Yahoo Rumors
What Do The Yahoo Rumors Entail?

Sallie Hofmeister must be pretty pleased with the response to her predictions as published in the Los Angeles Times. A rumor that Google co-founder Larry Page would announce a Google-branded device at CES on Friday got a lot of attention. Google and Wal-Mart both dismissed talk that a PC was forthcoming from them.

The other interesting rumor cited speculation over Microsoft going from losing the AOL deal to Google to making overtures to Google, in the neighborhood of $80 billion. The figure, a 30 percent premium over Yahoo’s valuation according to the article, was rejected as being too low.

Wall Street investors took Hofmeister’s “predictions for the media industry for 2006, based on interviews with industry analysts, executives and investors, along with a little intuition” to heart, though. Reuters reported a big upswing in Yahoo call options.

The call option contracts would let investors buy shares of Yahoo in January for $40 and $42.50, the article said. If the Microsoft rumor proved true and shares of Yahoo began trading in January for higher prices than the calls, the option investors profit from the difference in price.

No one from Yahoo or Microsoft has commented on the rumor yet, and it could be that Yahoo’s forthcoming earnings report, bolstered by a robust online advertising market, may be the cause driving those options. The article did offer the possibility that the rumor contributed to those options, too.


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David Utter is a staff writer for WebProNews covering technology and business.

LA Times Stirs Yahoo Rumors
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