May 4, 2008

Microsoft gives up bid for Yahoo

A shotgun marriage that appeared to be boiling up eventually fizzled out. We are talking about Microsoft's ongoing three-month flirting with Yahoo. Microsoft chief executive Steve Ballmer, according to the BBC website news, had formally pulled back the $47.5bn offer to buy Internet company Yahoo. The main reason was that the two parties could not agree on an acceptable sale price.

The Seattle company that dominates PC usage with its Windows operating system was rebuffed by Yahoo chief executive Jerry Yang who had insisted on at least $53bn or $37 a share before any deal could be closed.

Microsoft had earlier offered to buy Yahoo at $44.6bn but raised the offer to $47.5bn at $33 per share - but, obviously, Yahoo was not keen to take the bait and instead demanded more.

The lucrative Internet advertising market was worth $40bn in 2007 and is predicted to double to $80bn by 2010.
Microsoft has been looking for a good buyout as it seeks to counter the dominance of Google in Internet advertising.

According to the BBC's Peter Bowes, analysts believe the breakdown in talks may have an adverse affect on Yahoo shares and generate uncertainty among investors about the company's management.


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