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You are here: Home / World Wide Web / Yahoo Wants a Microsoft Takeover
Once-Defiant Yahoo Now Wants a Microsoft Takeover
Once-Defiant Yahoo Now Wants a Microsoft Takeover
By Jennifer LeClaire / CRM Daily Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus
In the wake of shattered hopes for an advertising agreement with Google, Yahoo wants Microsoft to rescue it from its financial woes.

Google on Wednesday terminated its agreement with Yahoo following an indication that the Department of Justice would seek to block it. Yahoo was counting on the agreement to accelerate investments in its top business priorities through an infusion of cash.

Now Yahoo CEO Jerry Yang is willing and even eager to resume negotiations to sell his company to Microsoft. Microsoft General Counsel Brad Smith testified against the Google-Yahoo ad deal before Congress on Oct. 1. Microsoft has not yet responded to Yahoo's off-the-cuff invitation to bid again for the company.

"To this day, I believe the best thing for Microsoft to do is to buy Yahoo," Yang said Wednesday evening at the Web 2.0 summit in San Francisco. While Yang said Microsoft and Yahoo haven't been talking since hostile takeover negotiations ceased earlier this year, he and the board "remain open to everything."

Yahoo's Hard Stance

Yahoo rejected Microsoft's $44.6 billion takeover bid -- twice. Microsoft CEO Steve Ballmer sent what amounted to an ultimatum letter to Yahoo's board in early April. The letter made clear that Microsoft's goal in making "such a generous offer" was to create the basis for a speedy and ultimately friendly transaction.

The deal died, along with all talk of it, until mid-October. That's when Ballmer said a Yahoo acquisition would still make sense for both companies at the Gartner technology conference in Orlando, Fla.

Ballmer insisted that Microsoft had no interest in acquiring Yahoo and was not holding any discussions with Yahoo. He did say the companies could consider a partnership on search engines in the future. Microsoft also issued a statement at that time saying it had no interest in acquiring Yahoo.

Changing Market Moods

Yahoo's shares closed at $13.92 Wednesday, nearly 60 percent below Microsoft's last offer. Industry watchers say Microsoft is in a prime position to purchase Yahoo at a bargain price and leverage its huge audience. Yahoo is the number-two search engine, and could be Microsoft's best opportunity to compete with Google.

Greg Sterling, principal analyst at Sterling Market Intelligence, was surprised by Yang's remarks and somewhat "revisionist" characterization of the earlier Microsoft-Yahoo dealings. It seems now that Yahoo's management feels it may have made a mistake in so vigorously resisting a Microsoft takeover, he said.

"Earlier this year, it could be said that at best Yahoo was ambivalent about an acquisition by Microsoft. But it sure appeared like Yahoo was doing everything it could to avoid being taken over," Sterling observed. "In that view of things, the company was successful. However, now the mood has changed, it would appear, because of the loss of the Google deal and the accelerating downturn in the economy."

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