Yahoo Shares

Yahoo stock closed down 91 cents, or 6.9 percent, to $12.22. The stock has ranged between $8.94 and $30.25 over the past year.

American Technology Research analyst Rob Sanderson wrote in a note to investors that he expects a significant slowdown in online shopping.

Sanderson also wrote that he expects "the online advertising market to take a much greater than seasonal decline" in the first three months of 2009. The post-holiday first quarter is traditionally slower for online ad spending.

However, Sanderson noted that the possibility of a sale to Microsoft Corp. or another sort of deal could keep Yahoo's stock from falling too far.

"We continue to believe this is the ultimate outcome and will reward Yahoo shareholders, but have no visibility on timing," Sanderson wrote.

The analyst downgraded shares of Sunnyvale, Calif.-based Yahoo to "Neutral" from "Buy" and cut his price target to $14.50 from $18.

Stocks Head to Higher Open

Stocks were poised to open higher Monday after several reports of potential corporate deals, including speculation Washington Mutual Inc. will get a $5 billion investment from private equity firms.

The nation's largest thrift is in talks with buyout shop TPG Inc. about a possible capital injection, according to The Wall Street Journal. The company, which has suffered big losses tied to subprime mortgages, would become the latest U.S. financial institution to reach such a deal.

In addition, Microsoft Corp. gave Yahoo Inc. a three week deadline to agree to a takeover, or Microsoft would launch a proxy fight for control of the company. Yahoo said Monday the deal isn't in the best interests of its shareholders, and called the proxy threat counterproductive.

And Swiss pharmaceutical maker Novartis AG said it will spend about $38 billion in a two-step bid for a majority stake in U.S. eye-care company Alcon Inc.

Earnings season unofficially begins after the closing bell when Alcoa Inc., the world's third-largest aluminum producer, is scheduled to release first-quarter results.

Dow Jones industrial average futures rose 69, or 0.70 percent, to 12,679. Standard & Poor's 500 index futures advanced 11.90, or 0.87 percent, to 1,383.80. Nasdaq 100 index futures rose 15.75, or 0.84 percent, to 1,885.50.

Bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.52 percent from 3.47 percent late Wednesday.

Light, sweet crude rose $1.16 to $107.39 in premarket electronic trading on the New York Mercantile Exchange. Gold was higher, and the dollar was mixed against other major currencies.

There were no major economic reports scheduled to be released during the session.

Overseas, Japan's Nikkei stock average rose 1.18 percent. Britain's FTSE 100 added 0.95 percent, Germany's DAX index rose 0.32 percent, and France's CAC-40 added 1.13 percent.

Yahoo research centre in Israel

Web search company Yahoo Inc.said on Tuesday it has launched a new research lab in Israel, its first in the region.

The research lab in the northern port city of Haifa will be led by Ronny Lempel, an information organisation and retrieval expert. He previously worked at the Information Retrieval Group at IBM's Haifa Research Lab, focusing on research and development for enterprise search systems.

The lab, which opened on Tuesday, will focus on simplifying complex technology problems in searching the Web, Yahoo said.

Rival Google opened its second R&D centre in Israel in June. Its Israeli centres are in Tel Aviv, Israel's financial and cultural centre, and Haifa.

"Search is still in its infancy," Prabhakar Raghavan, head of Yahoo Research, said in a statement. "At Yahoo, we are working on the hard core science that can lead to search experiences that are significantly beyond the current art." (Reporting by Tova Cohen, editing by Elizabeth Fullerton)

EU approves Google's DoubleClick bid

European Union regulators say Internet portal giant's $3.1 billion bid for online ad tracker won't hurt competition.

European Union regulators have given a green light to Google Inc.'s $3.1 billion (€2.13 billion) bid for online ad tracker DoubleClick, saying the deal will not hurt competition for online ads.
Critics have complained the deal would give Google (GOOG) too much power.

But the European Commission says it found no proof that Google and DoubleClick would be able to squeeze out competitors. That is because Microsoft, (MSFT) Yahoo (YHOO) and AOL provided "credible" alternatives for placing ads on Web sites.

The commission says Google and DoubleClick are not currently rivals. It says Google's purchase even of a potential competitor would not hurt competition in the online ad market.

Not 'going to get into a fight' with Microsoft

News Corp. (NWS.A:17.79, -0.37, -2.0%) (NWS) Chairman Rupert Murdoch reiterated Monday that the company has no interest in getting into a bidding war with Microsoft (MSFT) over Yahoo (YHOO) . "Yahoo missed out," Murdoch said of the search engine and portal, having acquired Overture several years ago, only to underspend on it and watch Google (GOOG) overtake Yahoo with a more than 60% share of the search engine market share in the U.S. "We're very happy to be in the Google camp," Murdoch went on. "They sell out search advertising, and they pay us well for it." News Corp. is the parent company of Dow Jones, which includes MarketWatch.

Microsoft finds new antitrust scrutiny

In a statement released shortly after the bid was made public, Sen. Herb Kohl, chairman of the Senate Antitrust Subcommittee, said, "We will need to scrutinize the deal carefully to insure that it will not cause any harm to the competitiveness of what has been a vibrant high tech marketplace, nor negatively impact the privacy rights of Internet users."

In addition, the Associated Press quoted a Justice Department spokeswoman as saying the agency will look into the competitive consequences of combining the companies, which together own about 32% of the U.S. search market. A department spokeswoman didn't immediately respond to a request for comment.

Such scrutiny is to be expected for any large deal involving Microsoft (MSFT:30.45, -2.15, -6.6%) , said Mark Ostrau, an antitrust attorney with Fenwick & West LLP in Mountain View, Calif.

Microsoft settled a Justice Department antitrust case in 2002, and remains under supervision in a Washington court as part of a related consent decree.

Earlier this month the European Commission announced the launch of two fresh probes into the company's competitive behavior, focusing on its Office and Internet browser software.

"Any time I'm asked to analyze a potential deal for a client with Microsoft, and handicap the level of [antitrust] review, I always say, 'You have to add the Microsoft factor'," Ostrau said. "Just about anything Microsoft does gets a close eye, and not without reason."

Microsoft's Windows software provides the digital framework for most PCs sold in the world, while its Office software dominates its respective market. That raises questions about any of Yahoo's extensive technology that could be pulled into either system and shut out competitors, Ostrau said.

Microsoft's bid for Yahoo (YHOO:28.38, +9.20, +48.0%) is widely seen as an effort to bolster competition with mutual rival Google Inc. in the online search and advertising markets. Google (GOOG:515.90, -48.40, -8.6%) has faced its own antitrust scrutiny over its pending acquisition of online advertising company DoubleClick, both here and in Europe.

"As in our recent examination of the Google-DoubleClick deal, we will need to investigate how this combination affects consumers, advertisers and businesses who increasingly use the Internet," Kohl said in his statement.

Ostrau speculated that should Microsoft succeed in buying Yahoo, the matter could get pulled into the consent decree that has Microsoft regularly reporting to a court on its competitive behavior. The decree was recently extended to November 2009, thanks to the efforts of a group of states led by New York.

However Jay Himes, the antitrust chief at the New York Attorney General's Office, said, "The consent decree and the Microsoft offer to buy Yahoo are entirely separate."

Edward Henneberry, co-chair of law firm Heller Ehrman LLP's European Practice Group with a focus on antitrust, said a combination of Microsoft and Yahoo could actually be presented by the companies as a boon for competition in the online advertising market, because it's currently dominated by Google.

"The case for them is they need the sufficient scale to compete with Google, and that'll be good for competition," Henneberry said. "This is going to get reviewed by agencies in the U.S. and Europe, and no one's thinking it won't be, but I wouldn't put any great note on that."

One of the complaints raised about the Google and DoubleClick merger was the large aggregation of user data that would be housed under one roof, theoretically making it more vulnerable to misuse. Such user data is collected by Internet firms to better target advertising.

Jeff Chester, executive director of the Center for Digital Democracy, which has opposed the Google and DoubleClick merger on privacy grounds, objected to Microsoft's bid for Yahoo.
A written statement from Chester said, "In an online era dominated by digital behemoths, consumers will be more vulnerable to having their personal information become the property of the GoogleClicks and Microhoos."