Yahoo!

Yahoo! may still be a good buy at this level even after the MSFT announcement. Here are a few scenarios of what might happen according to Citigroup's Mark Mahaney.

• Scenario #1: Yahoo hits the $31 bid. 20% probability.

• Scenario #2: Yahoo rejects the bid; MSFT ups its offer; the deal happens. 40% chance. He considers this the most likely outcome.

• Scenario #3: Another bidder emerges and wins. 5% chance. “We believe that the $45 billion price tag and the strategic value of Yahoo to Microsoft make the likelihood of a successful competing bidder very low,” he writes.

• Scenario #4: Deal blocked by regulators. 10% chance. He notes that the combined companies are at most 30% of total U.S. online advertising, and less than that in Europe.

• Scenario #5: Yahoo/Google (GOOG) search outsourcing deal. 25% chance. “We believe the probability of this is greater than financial markets realize,” he writes. “If Yahoo’s board and management want to remain independent, shareholders will insist on a major value-creating strategy to balance the MSFT bid. This may be the only viable strategy, as it could deliver 25%-plus accretion to YHOO’s cash flow.”