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Microsoft: New talks for alternative Yahoo deal
(Agencies)
Updated: 2008-05-19 08:56 SAN FRANCISCO - Microsoft Corp. is once again trying to team up with Yahoo Inc. to challenge Internet search and advertising leader Google Inc., although at this point the renewed talks haven't escalated to another attempt to take over Yahoo.
The Redmond, Wash.-based software maker disclosed the revived discussions Sunday without providing any specifics about the nature of the deal being explored except to say it involved bolstering the companies' position in the online search and advertising markets. "There of course can be no assurance that any transaction will result from these discussions," the statement said. Yahoo had no immediate comment Sunday. Microsoft emphasized that it hasn't resurrected a $47.5 billion takeover bid that its chief executive, Steve Ballmer, withdrew May 3 after Yahoo CEO Jerry Yang - acting on behalf of Yahoo's board - demanded an additional $5.5 billion. But Microsoft left open the possibility that it might dangle another buyout offer of Yahoo, depending on how the discussions progress between the two companies and their respective shareholders. Yahoo is facing intense pressure from its shareholders to reopen sales negotiations, with activist investor Carl Icahn threatening to replace the Sunnyvale-based company's entire board unless a deal can be working out before Yahoo's July 3 annual meeting. Although Microsoft hasn't been in touch with Icahn yet, the software maker reached out to Yahoo after the billionaire revealed his plans Thursday to lead a shareholder mutiny, according to two people familiar with the current status of the discussions. These people requested anonymity because they aren't authorized to speak on behalf of the companies. Microsoft's latest talks with Yahoo could be aimed at providing an alternative to a search advertising partnership that Yahoo has been exploring with Google as part of its attempts to remain independent. Last month, Yahoo completed a two-week test that allowed Google to use its superior technology to sell ads alongside a sliver of Yahoo's search results. Since then, the two rivals have been mulling a long-term alliance that would likely raise antitrust concerns because the two companies combined control more than 80 percent of the US search advertising market. While Google's help probably would provide Yahoo with a short-term lift, it might hurt Yahoo in the long run by making Google even stronger, according to some analysts. Ballmer already has said Microsoft will be less interested in Yahoo if it cedes control of search advertising to Google. Icahn has urged Yahoo's board not to enter into any deals, such as a Google partnership, that might diminish the company's value to Microsoft. Nevertheless, some analysts believe a formal partnership between Google and Yahoo could happen any day. |
