Yahoo plunges after Microsoft withdraws bid

Shares fall 16.4% from Friday's close

Yahoo shares were pummeled Monday, the first trading day since Microsoft said that it failed in its attempt to acquire the Internet portal, though the stock performed as if the company still is a takeover candidate.

Yahoo traded at $19.18 when Microsoft bid $31 a share for the company in January, so the more bearish Wall Street experts predicted that Yahoo would sink back to that level. The stock, though, fell only 15% on Monday to $24.37.

Analysts were busy Monday handicapping the situation.

Citi analyst Mark Mahaney also thinks News Corp. might be interested in buying Yahoo, though he still downgraded the stock to "sell" and reduced his target by $8 to $26.

RBC Capital Markets analyst Ross Sandler sliced his target by $5 to $27 but kept his "outperform" rating even while predicting Yahoo will face "significant execution challenges, shareholder lawsuits, employee attrition and a weakening ad economy."

He also said that should Yahoo fail to live up to financial expectations this year, he "would not be surprised to see Microsoft come back to the table."

Goldman Sachs analyst James Mitchell, meanwhile, predicted that Google will benefit "from the disarray of its two largest competitors." Therefore, he upped his $560 Google target to $650.
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