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Microsoft's Yahoo bid sends Softbank's stock into orbit

Posted by: Ian Rowley on February 3, 2008

Japan’s retail investors didn’t waste too much time mulling over the likely impact of Microsoft’s huge $44.6 billion bid for Yahoo. In Monday morning trading in Tokyo, stock in Softbank, a tech conglomerate which has a 41% share in Yahoo Japan and a 3.9% in Yahoo in the US, soared 13% to $20.30, its biggest daily gain in nearly two years. Trade in Yahoo Japan, which Yahoo has a 33% stake, though, was nonexistent but only because a glut of “buy” orders halted dealing.

Making sense of Softbank stock price movements isn’t always easy. Softbank, headed by charismatic CEO Masayoshi Son, has long been a favorite of retail investors even when analysts have raised questions over the company’s accounting policies and strategy. It’s likely that a large part of today’s stock rise is individuals piling in hoping for a quick profit rather than backing for the deal.

Nevertheless, Tokyo watchers reckon Microsoft’s financial power and tech prowess could help Yahoo Japan, the country’s most popular portal, fend off Google, which has been busy forging ties in Japan with mobile giant NTT DoCoMo of late. Following Microsoft’s bid for Yahoo, Yuichi Sato, an analyst at Mizuho Securities upped his rating of Yahoo Japan from “buy” to “strong buy”.

The Microsoft offer also appeared to increase investor confidence in other Japanese stocks, many of which have been weighed down in recent weeks by fears for the US economy. Overall, the Nikkei 225 index closed the day up nearly 3% and at its highest level for two weeks.

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