Not my usual subject matter, but this was just too rich to pass up…
Early this morning, the Wall Street Journal publishes a story seconding an unsourced rumor in the New York Post (a publication that has much less credibility) that Microsoft is in talks to buy Yahoo.
Relevant quotes from that story:
“In what appear to be early-stage discussions, executives at Microsoft and Yahoo are taking a fresh look at a merger of the two companies or some kind of match-up that would pair their companies’ respective strengths, say people familiar with the situation.”
“Short of a wholesale merger, Microsoft could spin its online group into a separately-run Yahoo, in return for a Yahoo stake. Though a person familiar with the matter says Microsoft would likely want to acquire Yahoo.”
Yahoo stock jumps nearly 20% at opening. Every other news outlet in the world races to write stories citing the Journal citing these unattributed stories.
But around 1:00 (EDT), the New York Times demurs. Around 3 there’s a big selloff. YHOO stock ends up around 10% instead of 20%. Not bad.
At 4:19, the Journal republishes its story almost verbatim, with a couple of important differences this time:
“Microsoft and Yahoo in recent months discussed a possible merger of the two companies or some kind of match-up that would pair their respective strengths, say people familiar with the situation. But the merger discussions are no longer active, these people say. The two companies may still explore other ways of cooperating.”
“Still, Yahoo doesn’t appear interested in a major deal with Microsoft, say people familiar with situation.”
Somebody got rich off all this movement. All because a couple of reporters wrote a story based on unattributed sources.
Does the SEC investigate this kind of thing? Should they?
By the way, Henry Blodget was correct–any such merger would have been a disaster for both companies, unless Microsoft was willing to divest control of its half of the JV and spin it off into a separate company.
Posted by mattydread 