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Yahoo and Microsoft have again stopped communicating.  After Yahoo has continued to hold out for a share price that is to high for what it is worth, the shares have tumbled from the $26-$27 / share range down into the low $20’s.  A far cry from the $33 / share Microsoft had been offering.  Not only was Yahoo’s $37 / share asking price to expensive, it also included a very lucrative severance package put in place by Yahoo’s management.  Yahoo being back in the low $20’s, around where it was before the Microsoft offer show’s you what investors feel the real value of Yahoo’s share price is worth.

After the Microsoft/Yahoo showdown that ended in Microsoft walking away from their Yahoo merger, Investor Carl Icahn has made a huge bet that he can purchase enough Yahoo stock to overthrow Yahoo’s board and sell the company to Microsoft while netting himself a huge profit from the stock purchases.  Carl Icahn has spent more than $1 billion for his over 4% stake in Yahoo’s stock.  Most of Icahn’s stock has been purchased for between $24-$25 a share after the stock dropped when Microsoft walked away from the merger.  If he can get control of Yahoo, and broker a deal between it and Microsoft, he has the possibility of profiting from it in the tune of $9-$10 per share he owns.

As we head into the last half of april, company earnings will start to roll out.  This is commonly known as 1st Quarter earnings season.  The beginnings of what has been rolling out is been a mixed bag of earnings.  Google pushed the markets quite a bit higher as many people thought they would have weak earnings from the recession, but the suprised the market.  Yahoo slightly beat estimates, but didn’t move the stock much, and many other companies are very mixed in their earnings picture.

Microsoft has given Yahoo a 3 week ultimatum to accept it’s $41 billion buyout offer, or Microsoft would launch a hostile takeover through Yahoo’s shareholders at a lower price.  “If we have not concluded an agreement within the next three weeks, we will be compelled to take our case directly to your shareholders, including the initiation of a proxy contest to elect an alternative slate of directors for the Yahoo board,” wrote Microsoft Chief Executive Steve Ballmer.  Yahoo’s board officially rejected the deal a month earlier looking for a higher price.  Yahoo is a dangerous stock to play at the moment, the stock price (which is highly expensive at the moment) has some definite downside if Microsoft goes hostile on Yahoo, but could lose very little if Yahoo’s board agree’s to the offer on the table.