Small caps open lower

Alex Alexandrov | Feb 11, 2008 10:15am EST | Comment

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The Russell 2000 (NYSE: IWM) and the other major U.S. indices are in the red despite news of the latest corporate deal making.

At 10:13 a.m. ET, the small-cap index had dropped 7.39 points, or 1.06%, to 691.51. The Dow Jones Industrial Average (INDU) was down 98.11 points, or 0.81%, to 12,084.02.

Search engine Yahoo! Inc. (Nasdaq: YHOO) will reject a bid from Microsoft Corp. (MSFT), the Sunnyvale, Calif.-based company announced before the start of trading.

“Microsoft’s proposal substantially undervalues Yahoo!,” the search engine said in a statement.

The deal was initially valued at about $45 billion but has since decreased to about $42 billion as the price of Microsoft’s shares have fallen. The Redmond, Wash.-based software giant is expected to take its offer directly to Yahoo!’s shareholders.

A merger between the two companies would create a more muscular rival to online search and advertising leader Google Inc. (Nasdaq: GOOG).

More mergers and acquisitions news is coming from networking solutions provider Nortel Networks Corp. and telecommunications heavyweight Motorola Inc. (NYSE: MOT), which are in talks to merge their wireless infrastructure divisions, according to The Wall Street Journal.

Futures were pointing slightly higher and the Russell 2000 opened in the green but stayed in positive territory only a few minutes.

Dragging the small-cap index down is laser vision correction services provider LCA-Vision Inc. (Nasdaq: LCAV), which saw its fourth-quarter profit decline and announced that it will trim jobs.

Also posting weaker fourth-quarter numbers is Albany Molecular Research, Inc. (Nasdaq: AMRI), a chemistry-based drug discovery and development company which saw its net loss widen.

But there are also winners despite the bearish trend. Phoenix, Ariz.-based electronic payments solutions provider Hypercom Corp. (Nasdaq: HYC) is considering selling itself to competitor Ingenico Corp.