Microsoft Refuses to Outright Buy Yahoo!

November 20, 2008

Microsoft Yahoo Deal(ChattahBox) — Chief Executive Steve Balmer ruled out any chances of acquisition of Yahoo Inc by Microsoft. The news comes just 24 hours after the resignation of Yahoo CEO Jerry Yang. However he said that the company was definitely interested in resuming talks about partnering the web search partnership.

Yahoo shares had rallied earlier when the investors heard that Microsoft may renew its bid for the company. However, Yahoo fell by 19 percent once the statement from Balmer came out. Balmer was speaking at the annual shareholder’s meeting for Microsoft and clearly stated that the company is done with all the acquisition talks with Yahoo!.

Microsoft had earlier withdrawn its $47.5 billion buyout offer for Yahoo after former CEO Yang and other directors had rejected the bid as too low. It then offered to buy Yahoo’s search business but the company decided to sell it to Google. The deal fell through when the US anti-trust regulators got concerned about an alliance between Web’s two biggest search companies. Balmer stated that Microsoft is still interested in discussing the search deal, if needed.

Yahoo is still a profitable company and is expected to pull revenues worth $5.4 billion this year. At this time, Yahoo needs a strong leader that can take tough decisions including laying off employees, divesting operations or even selling the company outright. In spit of Yahoo strong presence, Yahoo faces burgeoning pressure from News Corp’s MySpace and Facebook social networking site, Google’s strong presence in the search arena. As the economic crisis, the company may be loosing ground sooner than expected. Yahoo’s shares closed at $9.14, lowest in more than five years. The current share price, which even after rising by 9 percent on Nov. 18 on Yang’s news is still one third of 33 a share price that Microsoft offered just five months back.


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