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Rory Cellan-Jones

Yahoo to Microsoft - back off Ballmer...

  • Rory Cellan-Jones
  • 7 Apr 08, 14:04 GMT

Great news. After two months of tedium, the Microsoft/Yahoo battle has caught fire again. On Saturday, Steve Ballmer wrote to Jerry Yang and his Yahoo board threatening all sorts of mayhem if they didn't agree a deal within three weeks.

Jerry YangNow Jerry Yang and Yahoo's chairman have written back - and despite the "Dear Steve" and the "very truly yours", this is anything but a cordial reply. The letter makes it clear that substantial negotiations have been going on between the two sides but says Microsoft "mischaracterises the nature of our discussions with you". And it gets pretty personal, addressing Mr Ballmer directly on the issue of who is to blame that those talks have stalled: "Steve, you personally attended two of these meetings and could have advanced discussions in any way you saw fit."

But the most wounding jab relates to Mr Ballmer's suggestion that the economic climate has worsened for internet companies over the last two months. "Not for us, mate, though it's not looking too brilliant for you" is the underlying message in a letter which points out that Microsoft's falling share price has cut the value of its bid.

Steve BallmerYahoo's board is saying it can play hardball with Ballmer - and is confident that it has the backing of its shareholders. What it still needs to prove to those investors is that it has a way of making their shares worth more than Microsoft is offering - either by extracting a higher bid, selling to someone else or continuing to grow Yahoo as an independent company. Watch the share price over the coming days for any clues about the outcome of this battle. Right now it does not tell a story of a company which can expect a higher bid to come along.

So what are Jerry Yang and his fellow directors up to? The best guess must be that they are betting that they can still persuade Microsoft to up its bid. But what started as a slow-moving and supposedly "friendly" game of corporate chess has now become a high-stakes poker game with no love lost on either side.

Comments

Microsoft shouldn’t be allowed to buy Yahoo, Microsoft has clearly abused it’s position within the marketplace many times over the years. I used to be an avid and keen supporter of MSFT but due to the work I was involved with, I had to deal with them regularly and that experience in my life taught me that if they don’t get what they want, they do anything to get it, no matter the consequences.

In my opinion, MSFT must be broken up into smaller companies and that, I think will ensure they never abuse or dominate another market ever again.

  • 2.
  • At 04:47 PM on 07 Apr 2008,
  • Russell Lambert wrote:

I don't even see why Microsoft would want to buy Yahoo. My impression of Yahoo is "inferior version of Google with intrusive adverts"...hardly something I'd see fit to buy if I was runnng the most powerful corporation in the world!

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