Yahoo suspends shares amid takeover rumours

Yahoo's shares were suspended today amid mounting market rumours that it is about to announce a serious profit warning or admit to being the target of a hostile take over bid.

Prior to the suspension, shares of Yahoo had fell by $1.41, or 6.3 per cent, to $20.97 - their lowest levels since September 1998. Yahoo has lost several key executives since last winter, often after they have cashed in millions of dollars worth of stock options. This, combined with the firm's low share price, has made it a takeover target, according to market analysts.

Last week, Yahoo adopted a Stockholder rights plan, which it said was designed "to deter coercive take over tactics". The plan would effectively push the price of acquiring the company in a hostile bid through the roof. However, at the time Yahoo denied its move had been motivated by an external attempt to gain control of the firm.

After announcing the plan Susan Decker, chief financial officer at Yahoo, then canceled an engagement at a New York conference organised by Merrill Lynch. Henry Blodget, an analyst with the investment bank, described the move as "unprecedented".

Blodget wrote in a research note that the cancellation may signal a possible take over bid for Yahoo, with media giants Viacom or Vivendi Universal favourites.

Analysts said other possible explanations for the suspension were that the firm was about to announce a profit warning or that it would close non-profit making divisions.