Rumors abound on the business side of the technology market. This has never been more true than in the on-again, off-again romance between Microsoft and Yahoo!. Today there is a new rumor floating about that a new deal is in the works, this time involving the total sale of Yahoo! to Microsoft, the installation of a complete new management team at Yahoo!, and the involvement of players from AOL and Fox Interactive.

These rumors surfaced today in the London Sunday Times, as further reported by Reuters. The initial Times report said that senior directors from Microsoft and Yahoo! were close to an agreement. The deal was said to be for the complete purchase of Yahoo! by Microsoft for $20 billion, less than half of what they had offered just a few short months ago. Upon signing, Microsoft was said to be ready to install a complete new management team at Yahoo!, led by ex-AOL Chairman and CEO Jonathan Miller and former Fox Interactive Media President Ross Levinsohn.

Shortly after the initial rumor surfaced in the Times, a blog associated with the Wall Street Journal (AllThingsDigital) quoted Levinsohn as saying the report was “total fiction.” Further, Yahoo spokesman Brad Williams said, “We don’t comment on rumors, and all this is a rumor” and a spokeswoman at Microsoft refused to comment on the rumor at all.

The Microsoft – Yahoo! merger story is rapidly becoming a saga. Yahoo! turned down a takeover bid worth almost $50 billion in May, a rejection led by Yahoo! CEO and founder Jerry Yang and opposed by activist investor Carl Icahn. Speculation about such a deal was fueled again when it was announced a few weeks ago that Yang would step down as soon as a successor was found. More fuel was poured on the fire earlier this week when Icahn added another 7 million Yahoo! shares to his portfolio.

We have all seen rumors such as this reported, only to be squashed in the press and then become reality a few days later. We have all seen rumors that led to nothing. Knowing which rule to apply, at this stage of this particular rumor, would be a wonderful talent to have. Unfortunately, we know of no one with that talent. Rumors more solid than this one have been proven false. Rumors less substantial have proven to be true. Only time will tell which it is in this case.

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Entry was posted on Sunday, November 30th, 2008 at 3:14 pm under Internet, Microsoft, Yahoo!.

Read more entries by Michael W. Jones.
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