Field Notes Inside an Integrated Communications Agency

A few months ago I weighed in on Microsoft's bid to acquire a stagnating Yahoo. Earlier this week Microsoft, in a 'dear john' letter from Steve Ballmer to Yahoo CEO Jerry Yang, called Yahoo's bluff, pulling its offer off the table.

Mr. Yang could soon be sweating bullets.

April saw a flurry of tense negotiations, but in the end, the two tech giants could not reach an agreement. Microsoft offered as high as $33 per share; Yahoo would not drop below $37 per share.

As trading closed Monday of this week, Yahoo shareholders saw their Microsoft-induced bubble cut in half. Just prior to the January announcement of Microsoft's intentions, Yahoo shares were creaking along at around $20. After months of trading in the high -20s, shares plunged Monday afternoon to around $24.

So why was the sell-off not more pronounced? At $24, shareholders are still looking at a significant premium over pre-bid levels. I'm neither trader nor economist, but this doesn't seem right to me. Is there something I'm missing?

Rumors are abounding that Microsoft's withdrawing was a purely tactical maneuver; that there is more news to come. On a smaller scale I could see this as a possibility. But a deal of this magnitude? Doubtful.

The Google AdSense deal is still on the table. Could Yahoo shares be propped up by the Google's gravitational pull?

Yahoo is by no means circling the drain. But investors will be watching the skies closely, which could put Jerry Yang in the hot seat. I would offer as cautionary tale the downward spiral of Apple following the ousting of Steve Jobs.

Steve Ballmer (number two) recently announced that individual social networks :: Facebook :: are just a passing fad. I wonder if he and Bill had any discussions about that. What I admire is the unrelenting tenacity of the hard learners up in Redmond.

The way I see it, the big FB will more likely be the place through which individuals access all their other networks.

Ballmers assessment assumes that people's friends are less important than those who want them to buy something.  

50% margin of error, I guess.