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Technology / AI and automation

Microsoft woos Yahoo again

Two weeks after it withdrew its $44.6bn offer, Microsoft yesterday issued a statement that it had raised with Yahoo an alternative that would involve a transaction with Yahoo but not an acquisition of all of Yahoo.

This time round, Yahoo appears to be more open to talking with the Redmond giant, responding that although it was not interested in being acquired, it’s open to pursuing any transaction which is in the best interest of our stockholders.

Both sides have yet to put some flesh on their statements, but one possible scenario would be for an advertising partnership where Microsoft places its ads on Yahoo. Yahoo has already been in partnership talks with Google over an advertising deal.

Another possibility is that the two could join forces to create a search company that could pose some threat to Google’s stranglehold on the market. Microsoft lags behind Google and Yahoo in the online search and advertising markets, holding only 9.4% of the market, compared to Yahoo’s 21.3%, and Google’s commanding 60% market share, according to researcher comScore Networks figures in March.

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Partnership may be easier to implement than acquisition, but is still not easy. Neither party can afford to put all of their bets on this transaction. Microsoft still needs to accelerate into the Asian online markets and to consider acquisitions in that part of the world. Yahoo still needs to increase the range of applications that it offers, either through organic development, through acquisition or through partnerships and co-development, said David Mitchell, SVP of IT research at Ovum.

This latest episode in the Microsoft/Yahoo saga happened a few days after billionaire investor Carl Icahn’s thwarted attempt to oust the current Yahoo board in a bid to get Microsoft and Yahoo back round the negotiating table. Icahn, along with many others was disappointed that Yahoo co-founder and chief executive Jerry Yang had rejected Microsoft’s offer of $33 a share as too low, forcing Microsoft to drop its bid in early May.

Coming up with some kind of agreement with Microsoft could prevent any future attempts by Icahn to drum up support to change the board.

But Microsoft did not completely slam shut the door on the prospect of a Yahoo takeover, saying in a statement it is not proposing to make a new bid to acquire all of Yahoo at this time, but reserves the right to reconsider that alternative.

This article is from the CBROnline archive: some formatting and images may not be present.

CBR Staff Writer

CBR Online legacy content.