"Kara Swisher raises a good question: What will Microsoft (MSFT) do if Yahoo (YHOO) reports rotten Q1 results? And there is reason to be worried. Thanks to MSFT’s pending $31-a-share bid, YHOO shares have largely been sheltered from the ugly slide suffered by Google (GOOG) shares in recent weeks. In fact, since Microsoft made its offer, Google has dropped 21% - at least part of that concern about a weakening online ad environment. Had that happened to YHOO - and if MSFT had not come along - Yahoo shares could now be at $15 and change. Remember that Yahoo is operating in the same softening advertising environment as Google - and in fact, its results could also be hurt by customer confusion about the potential impact from the takeover bid.
Henry Blodget today lays out a scenario where Yahoo reports a stinker, Microsoft pulls its offer, the stock drops 40%, and then MSFT comes back with a new offer - at $25."
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