- The Washington Times - Thursday, April 24, 2008


Microsoft Corp. Chief Executive Officer Steve Ballmer said he doesn’t plan to raise his $44.6 billion offer for Yahoo Inc., setting the stage for a fight to control the board that may start this weekend.

“We are offering a lot of money,” Mr. Ballmer said yesterday at a conference in Milan, Italy. “If Yahoo’s shareholders like it, that’s great. We are prepared to go forward without a merger.” On April 5, he threatened to oust Yahoo’s board and consider lowering the bid if the directors failed to negotiate within three weeks.

On Tuesday, Yahoo reported its first quarterly profit increase in more than two years. CEO Jerry Yang has spurned the $31-a-share bid, saying Yahoo’s financial performance and No. 2 rank in the U.S. Internet search market merit a higher price from Mr. Ballmer, who leads the world’s biggest software maker.

“He’s playing hardball, and I don’t think he can win,” said Larry Haverty, an associate portfolio manager at Gamco Investors Inc. in Rye, N.Y. “Microsoft is doing very poorly in these businesses; they have to have Yahoo.”

His firm, which had about $31 billion in assets under management as of Dec. 31, owns shares in Microsoft and Yahoo.

Microsoft rose $1.20, or 4 percent, to $31.45 in Nasdaq Stock Market trading yesterday. That values Microsoft’s half-cash, half-stock bid at about $30.45 a share. Yahoo fell 46 cents, or 1.6 percent, to $28.08.

Yahoo posted a first-quarter profit of $542.2 million, or 37 cents a share. That included a $401 million gain from a stake in Alibaba.com Ltd., a Chinese company that had an initial public offering. Sales climbed 14 percent, while larger rival Google Inc. posted growth of 46 percent for the same period.

Less than a month ago, Mr. Ballmer said Yahoo’s business had shown signs of deterioration alongside the U.S. economy, indicating that Microsoft doesn’t value Yahoo as highly as it did at the time of the original offer.

“Time is money; we’ve made that clear,” Mr. Ballmer told reporters after his speech at the conference.

Yahoo President Sue Decker said the company is experiencing a decline in search-related and graphical banner ads from finance and travel companies amid the economic slump. Growth in spending by companies in other industries such as technology and telecommunications countered those losses, she said.

Mr. Ballmer may have to nominate an alternative board slate to get Yahoo to negotiate, RCM Capital Management General Manager Walter Price said. Mr. Price, based in San Francisco, helps manage about $3 billion, including Microsoft and Yahoo stock.

Mr. Ballmer threatened to start a proxy fight and cut the bid if Yahoo failed to agree to terms by Saturday.

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