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Yahoo surges on rumor
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January 17, 2001: 6:13 p.m. ET
Viacom rumored acquisition of Yahoo sends shares of Web portal up 11%
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NEW YORK (CNNfn) - Shares of Yahoo Corp. jumped nearly 11 percent Wednesday, fueled by speculation that the Web portal may be acquired by Viacom Inc.
Yahoo rose $2.87 to $30.25
"The rumor was the major catalyst today that caused [Yahoo] stock to move," said analyst Jeff Fieler of Bear Stearns.
Santa Clara, Calif.-based Yahoo has been the subject of many rumors over the past year with Walt Disney Co. (DIS: Research, Estimates) most often mentioned as the likely acquirer, Fieler said. Traditional media companies are looking for a strategic move to compete against AOL Time Warner (AOL: Research, Estimates) which consummated its merger last week. CNNfn.com is a unit of Time Warner.
"I don't believe today's rumor," Fieler said. "Yahoo doesn't make as much sense as AOL because they are not a proprietary content provider."
 Both Viacom (VIA: Research, Estimates) and Yahoo declined to comment.
Yahoo shares have plummeted from their 52-week high of $250.06 but the company is still viewed as an acquirer rather than a takeover target, said analyst John Corcoran of CIBC World Markets. "Yahoo is not a weak dot.com player looking for funding," he said. "They have $1.6 billion of cash in the bank."
New York-based Viacom, which bought CBS Corp. in a $35.6 billion stock deal in September 1999, is still too busy with that acquisition to buy another firm, analysts said.
"With 40 percent of revenue coming from advertising, Viacom is already highly exposed to advertising in general," Corcoran said.
Since nearly 80 percent of Yahoo's revenue comes from advertising, a Viacom-Yahoo union is doubtful, he said.
"It's relatively unlikely that a player like Viacom would acquire Yahoo," Corcoran said.
Viacom rose 81 cents to close at $57.69. 
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