Microsoft no longer interested in buying Yahoo
By John Lister
Microsoft says it is still interested in an advertising deal with struggling search rival Yahoo. However, its boss has firmly ruled out any possibility of a full-fledged takeover.
The news caused Yahoo stock to fall into single figures for the first time in more than five years. A 9 percent rise on the announcement of CEO Jerry Yang’s resignation was wiped out twice over after the Microsoft revelation, with the stock down to $9.86 at the time of writing. As Dave Jeyes noted yesterday, Yahoo’s decision to reject a $31 per share offer earlier this year now looks a disastrous blunder.
The Times newspaper in the UK reports Microsoft boss CEO Steve Ballmer (pictured) as telling shareholders at a meeting today:
Let me be as clear as, I think I’ve tried to be publicly. We are done with all acquisitions, discussions with Yahoo!… I think it is an interesting possibility to look at a search collaboration with Yahoo! as we had proposed last summer. There’s no active discussion on that front. But we’d be very open to it. But acquisition discussions are finished.
After Yahoo rejected the buyout offer, Microsoft said it would pay $1 billion to take over Yahoo’s search division, which was also turned down. With Google abandoning a deal to share advertising with Yahoo, Microsoft’s bargaining position is far stronger than before.
And given the apparent lack of Microsoft interest in buying out even a portion of Yahoo’s business, there doesn’t seem a great deal of point in Yahoo trying to sell anything off: the cash that would raise would be unlikely to make any serious difference in the big picture.
That only leaves search collaboration, with Yahoo again in an unenviable position. Despite previous talks with the likes of AOL, it seems Microsoft is the only possible partner which could viably make Yahoo enough money for a deal to be worthwhile. But as much as Microsoft would love access to the search ad market’s second-biggest player, Yahoo’s plummeting stock likely means it needs a deal much more than Microsoft does – and that’s not a good negotiating position.
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