Major averages ended below their early highs but managed to post decent gains, continuing Tuesday's technically driven bounce. The Nasdaq rose 0.6% to 2273, thanks to strength in big-caps Oracle, eBay and could-be dance partners Microsoft and Yahoo! (Yes, Yahoo! is my employer and "Tech Ticker's" publisher.)
Microsoft rose nearly 2%, a gain many attributed to Jefferies analyst Katherine Egbert initiating coverage with a buy rating an $33 price target.
More likely, Microsoft got a bounce because of the renewed focus on a potential Yahoo!-AOL deal, even if the odds are very low of such a combo coming to fruition. In addition, Yahoo's decision to extend the deadline for outsiders (i.e. Microsoft) to nominate a board-slate is keeping alive the idea that Yahoo has alternatives to Microsoft's bid. The slim possibility Microsoft might NOT spend $40-plus billion to buy Yahoo! has to please Redmond's shareholders, who've been in a world of hurt since the bid was announced.
Ironically – and somewhat surprisingly -- Egbert is bullish about Microsoft in part because of the Yahoo! bid, writing: "We are encouraged by Microsoft's stake-in-the-ground bid for Yahoo and believe that it, along with a more conciliatory tone towards regulators, signals a shift in strategy -- from defense to offense."
Given the action in Microsoft stock prior to today, maybe defense was the best offense.Yahoo tech ticker