Whitling: yes, market value is simply where the supply and demand meet. However, if someone is willing to buy and someone else is willing to sell at that price, that's about the most objective measure we can come up with. It's like saying that the cost of duct tape is affected irrationally by terrorist scares. It's true, but that's how much duct tape costs at that moment.
There's supposed to be this thing called due dilligence that companies do before buying or merging to see if the stock is really worth how much it's trading for, but we're all human and can make mistakes and be influenced by others. The only real measure of how secure a company's profits are is the dividend they are paying out.
The recent tax cuts kind of help put dividends on a more fair ground compared to buybacks, but capital gains taxes also were reduced, so it's a bit of a wash now. You can't fake a dividend. You can fake a buyback by issuing more options and you can fake earnings by moving numbers into convenient rows, but a dividend is paid in cold, hard cash. Of course, you still need to take into account whether that dividend is sustainable, since the company could be borrowing cash in order to pay it.
The AOL-TW merger was one of the greatest financial disasters of recent times. (Enron, MCI WorldCom, and Tyco were simply scams.) They screwed up. Eisner is still screwing up at Disney, keeping their stock price low.
This is old news anyway, and it IS starting corporate reforms.
