- The Washington Times - Friday, June 13, 2008

SAN FRANCISCO (AP) - Yahoo Inc.’s efforts to revive takeover talks with Microsoft Corp. have reached a dead end, setting the stage for the Internet pioneer to turn over a piece of its advertising platform to online search leader Google Inc.

The news disclosed Thursday caused Yahoo shares to plunge by more than 10 percent as investors abandoned hope that Microsoft would renew a five-month quest to buy the Sunnyvale-based company.

Yahoo tried to renew the discussions at Microsoft’s last offer of $47.5 billion, or $33 per share, but the software maker wasn’t willing to bid that much again, according to a statement released Thursday.

Microsoft Chief Executive Steve Ballmer had withdrawn his oral offer of $47.5 billion offer after Yahoo CEO Jerry Yang asked for $37 per share in a May 3 meeting at a Seattle airport.

Shortly after that breakdown, Microsoft tried to convince Yahoo to sell its online search operations instead.

But Yahoo concluded that its search engine - the Internet’s second most popular behind Google - was too important to sell piecemeal.

Yahoo said Microsoft “unequivocally” rejected the notion of buying the entire company in a meeting held Sunday.

In statement, Microsoft asserted its plan involving the purchase of Yahoo’s search operations would have been worth at least $33 per share to Yahoo.

Yahoo now has to find a way to minimize the damage to its stock, which dropped $2.63, or 10.1 percent, to $23.52 in Thursday’s late trading.

With Microsoft apparently out of the picture, Yahoo is turning to Google for help.

Hoping to boost its revenue, Yahoo is expected to announce a deal that will turn over a piece of its online ad platform to Google. In a two-week trial completed in April, Google demonstrated its superior technology could generate higher revenue from text-based ad links displayed alongside some of Yahoo’s search results.

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