Ballmer fires up the Yahoo! rumor mill again

December 5, 2008

Sometimes it seems like the Microsoft – Yahoo! deal has been up and down more than the elevators in the Sears Tower. After yet another period of denial that there was a deal in the works, Microsoft CEO Steve Ballmer has been quoted as saying that such a deal would be better done sooner than later, once again fueling speculation that the software giant from Redmond has continuing interest in the purchase of the portal and search company from Sunnyvale.

This latest revelation came in an interview published today in the Wall Street Journal. The pertinent question was whether or not the recent Microsoft hire of Qi Lu, formerly a Yahoo! search executive, would make it any easier to integrate the search functions of the two companies if a deal could be reached.

In reply, Ballmer said, “I think a search deal makes great sense for Microsoft, and Yahoo, and I think I’ve been very open about that. That’s as true with Qi joining us as it was before Qi joined us. Obviously, the logistics of any such integration…can only be simpler by having somebody who will know both sides. But that was not a factor in hiring Qi. Our focus on portal and search is super-strong, and even if we never do a Yahoo deal or anything else, I wanted to have Qi come on board. It is kind of a bonus that if something happened with Yahoo I’m sure it’s somewhat simpler.”

Ballmer went on to say, “Look, the fundamental basis for doing the search deal with Yahoo has to do with critical mass in the advertising marketplace. It doesn’t have to do with technology, or any of these other things, it really is a market phenomenon. Together we would have more advertisers…which means we’d have more relevant ads on our page. We’d have higher monetization levels possible in front of us because there would be more people bidding on more key words. Most importantly, Google would have perhaps a real credible competitor sooner. I think good ideas are usually better done quickly than slowly, so it would probably be better for both of us, and certainly for Yahoo, if we were to do it sooner than later. But at the end of the day, that would have (to) be something Yahoo would be interested in as I have expressed our interest.”

As recently as last weekend, Ballmer and Microsoft spokespeople were saying that there was no truth to recent rumors about an impending purchase, or other sort of deal between Microsoft and Yahoo!. When those rumors were quashed, it was by a blog associated with the Wall Street Journal. Today’s Journal report would seem to indicate that such a deal is still quite possible. There is enough smoke around this issue that there must be some fire somewhere.

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