Yahoo shares broke through another psychological barrier Wednesday, edging down into the $13-a-share range.
Yahoo fell as low as $13.62 a share during intraday trading, down more than 6 percent from the previous day's close. Although Yahoo's shares continue to give up ground, the company's performance during the trading session has largely mirrored the broader markets.
With its shares dipping into the $13 range, Yahoo not only sets a new 52-week low but also reaches a trading level not seen since late May 2003.
Yahoo, as a result, also now has a market cap of $19.35 billion.
Last May, Microsoft walked away from its buyout offer of $47.5 billion to snap up all of Yahoo, only later to return with a partial buyout offer of $9 billion to acquire just the company's search assets.
At this rate, Microsoft may be able to acquire the entire company for what it was willing to pay for just the search business, should it decide to make another run at the company.
Analyst Rob Sanderson with American Technology Research, meanwhile, believes Microsoft may make another run at Yahoo, but at a "significantly" lower offer.
Said Sanderson in a research note Wednesday:
Since "walking away" from the previous Yahoo offer, the OSB (online services business) division of Microsoft has not come close to meeting expectations. Organic revenue growth has decelerated from 16 percent in March to 2 percent in June, according to our estimates. Losses have nearly doubled sequentially, from $1 billion operating loss run-rate in March to nearly a $2 billion loss run-rate in June.
At its July analyst day, Ballmer emphasized the importance of traffic and scale in the online search business...
OSB leadership and organizational structure remain in flux following the departure of Platform & Services President Kevin Johnson and the re-organization in July. Two months later, Microsoft has yet to name a new head of OSB. Other senior managers have also jumped ship with the general manager of digital advertising solutions leaving for Amazon and its media network VP & chief marketing officer going to Yahoo.
Meanwhile, Microsoft's organic efforts in search are falling further each month. ComScore reports that MSN has lost 260bps of U.S. search query share from a year ago to only 6.4 percent in August. This represents a greater than 30 percent drop in market share in one year.
Sanderson noted that because Yahoo's third quarter is expected to be weak, he's cutting his price target for the company and financial outlook.
His new 12-month price target for Yahoo is $22 a share, verses his previous forecast of $33 a share.
On the revenue front, Sanderson expects Yahoo to pull in $1.78 billion in the third quarter, slicing that projection down from his previous forecast of $1.85 billion. Similarly, for the year, the analyst revised his earlier estimates to $7.34 billion from his previous projection of $7.62 billion.
Sanderson also lowered his earnings estimates for the company to 8 cents a share for the quarter, compared with 9 cents under his earlier forecast, and an earnings per share of 67 cents for the year, verses his earlier projection of 69 cents a share.