Yahoo needs to convince investors

Yahoo Inc chief executive Jerry Yang is convinced that the company he started in a Silicon Valley trailer 14 years ago is worth more than the $47.5 billion that Microsoft Corp had offered for the Internet pioneer.

Now he may only have a few months to convince Wall Street that his rebuff of Microsoft's takeover bid was a smart move and if he can't, analysts won't be surprised if Yang is either replaced as CEO or forced to consider accepting a lower offer if Microsoft comes knocking at his door again. "This squarely puts the pressure on Jerry Yang to deliver results and shareholder value," Standard & Poor's equity analyst Scott Kessler said. "You are going to see a lot of shareholders just throwing in the towel because they are going to realize it's going to take awhile for the stock to get back to where it was on Friday."

Kessler and other analysts believe Yahoo's stock price will surrender most, if not all, of its 50% gain since Microsoft made its initial offer on January 31. The anticipated sell-off would leave Yahoo's market value hovering around $30 billion. In Frankfurt, Germany, three hours before trading opened in New York, Yahoo shares fell 18.6% to 14.74 euros ($22.79).

Most analysts believe Microsoft's stock price will rise. The shares had declined 10% to $29.24 since the bid, reflecting concerns that the proposed marriage would turn into a complicated mess that would enable Google to grow even stronger. Yahoo shares finished last week at $28.67, slightly less than the $29.40 per share that Microsoft was offering before CEO Steve Ballmer agreed to raise the offer to $33 per share in a last-ditch effort to get a deal done.