Microsoft Issues Statement Regarding Yahoo!

Microsoft on Sunday posted an announcement that it will continue to explore and pursue alternatives to improve & grow their online services and advertising business.
Microsoft is has reached out to Yahoo! With what they consider an alternative that would involve deal with Yahoo. This would not be an acquisition of Yahoo but rather an agreement to incorporate parts of Yahoo into the Microsoft family.

While it is not considering a new bid to acquire all of Yahoo! they are reserving the right to reconsider an alternative which will depend on other future developments and / or discussions that might take place with Yahoo. This could also include discussion with shareholders of Yahoo, Microsoft or with other third parties.

Other third parties would seem to indicate Carl Icahn who has a great amount of money and has begun buying Yahoo shares to try to throw out Yahoos board but who does not have enough money or power to make a serious play by himself.

Joining Ballmer was almost cast in stone!

Microsoft Drops Hostile Takeover Bid!
Steve Ballmer & Microsoft have packed up their bags and gone and let the building or bidding!Microsofts boss yesterday decided to abandon his $42 billion takeover of Yahoo! After initially raising their offer by $5 billion Friday to $33 a share - and having it rejected again by the Internet icon’s CEO, Jerry Yang. Jerry denied the initial bid of $29.00 as well.

“Despite our best efforts, including raising our bid, Yahoo! has not moved toward accepting our offer,” Ballmer said in a letter to the Yahoo! CEO.

“After careful consideration, we believe the economics demanded by Yahoo! do not make sense for us, and it is in the best interests of Microsoft stockholders, employees and other stakeholders to withdraw our proposal.”

Negotiations over the price of a possible deal began Friday between the two companies, sources said. Ballmer indicated that he was willing to pay $33 a share but Yang insisted his company was worth $37 a share, or nearly $5 billion more.

Sources have stated that Ballmer had contemplated dropping the bid since early last month after being rejected twice by Jerry Yang & Yahoo’s board of directors.

Most investment analysts and shareholders believed that there was little chance that Microsoft would walk away from the offer and Yahoo! shares traded up nearly 10 percent Friday to $29.70 in anticipation of a deal over the weekend.

The move may be terrible for Yahoo which stands to lose more than $15 billion in market value when the stock markets open tomorrow. Some large investors including hedge funds, were discussing throwing out the Yahoo! board themselves and trying to sell the company to Microsoft.

Many see this as a daring move if Microsoft is really gone for good. “There is no way that Yahoo! gets away with this,” said one large shareholder. “Yang is toast.”

Bt dropping Microsoft’s attempted takeover, Ballmer, decided not to pursue a hostile takeover of Yahoo!, something the CEO had promised when the Yahoo! board missed Ballmer’s deadline eight days ago.

Ballmer said Yahoo!’s promise to enter into a search agreement with Google, the No. 1 search company, would have made Yahoo! “undesirable as an acquisition for Microsoft.”

The deal, which would allow Yahoo! to carry Google ads, “would fundamentally undermine Yahoo!’s own strategy and long-term viability by encouraging advertisers to use Google as opposed to your Panama paid search system,” Ballmer said in the letter.

“This would also fragment your search advertising and display advertising strategies and the ecosystem surrounding them,” Ballmer added. “This would undermine the reliance on your display advertising business to fuel future growth.”

The takeover, had it been successful, would have recast the power structure of the Internet by forming a more formidable rival to Google, the leader of the $41 billion paid search business.

Yahoo! had hoped its new search technology, called Panama, would help shrink the gap between Google and itself, the No. 2 company in search. But Panama was a disappointment and Google’s dominance over Internet advertising remains.