Saturday, October 11, 2008

The Failed Yahoo! Microsoft talks

The way Microsoft had withdrawn its bid for Yahoo! seemed all too subdued, but it seems the Redmond software giant does not give up so easily.

Microsoft said Sunday that it is considering doing an unspecified deal with Yahoo!, but it’s not seeking another acquisition of the Internet portal–at least for now. Does this mean Microsoft will look to acquire Yahoo! on a later date? Seems very much possible.

Microsoft Corp. said on Sunday that it is talking to Yahoo Inc. about a transaction that doesn’t involve a full buyout like the software maker’s $47.5 billion offer that didn’t come through earlier this month.

Microsoft declined to provide details of its proposed deal with Yahoo!, but the transaction likely involves Yahoo!’s search advertising business. The deal could be structured two ways: as an acquisition of that business or a partnership in which Yahoo! outsources its search ads to Microsoft. Yahoo! has also been in discussions with Google about such an outsourcing partnership.

Yahoo! said in a statement that it had responded to Microsoft’s latest overture by telling the software giant that it’s not interested in being acquired at this time, but it’s “open to pursuing any transaction which is in the best interest of our stockholders.”

Even though Microsoft said Sunday it isn’t trying to acquire all of Yahoo!, it noted that it “reserves the right to reconsider that alternative depending on future developments and discussions that may take place with Yahoo! or discussions with shareholders of Yahoo! or Microsoft or with third parties.”

Many analysts believe that despite Microsoft’s assurances it is moving ahead without Yahoo, the software maker would revive its bid, likely at a lower price, if the Silicon Valley icon’s stock continues to languish.

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