Yahoo, Microsoft: Off again ... on again?

Just when it seemed that their stormy relationship had ended, Yahoo and Microsoft may end up reconciling and coming to terms on a merger sooner rather than later

Comments by CEO, Jerry Yang, and president, Sue Decker - pressured by a sliding stock price and grumbling shareholders - seem to indicate Yahoo may be willing to return to the bargaining table to make the deal happen while their seats are still warm.

It's become apparent following what appeared to be the end to a three-month saga - which began when Microsoft offered an unsolicited $US44.6 billion bid for Yahoo on February 1 - that there was far more than met the eye about Microsoft's courtship of Yahoo.

As in any relationship, the scenario perceived in public and played out in the press - that of an ardent Microsoft pursuing an unwilling Yahoo - doesn't tell the whole story.

It seems now that not everybody at Yahoo was keen on spurning Microsoft, and not everyone at Microsoft was all fired up to do the deal. A realisation that the two really do need each other may inspire the companies to eventually marry, like an on-again, off-again couple.

Decker, who had been noticeably silent since Microsoft's initial offer, found her voice this week in an interview published on the Tech Ticker webcast on Yahoo Finance. In the interview, she hinted that Yahoo might still be open to a deal, pointing out that it would be beneficial for both companies.

"When you stack up Microsoft's assets and Yahoo's assets, there are certainly some real reasons why the combined company could be really successful," she said, according to the webcast.

Decker's comments follow similar ones Yang made on Monday. Yang - who steered Yahoo to avoid acquisition - has been accused of not wanting to give up his baby and blocking the deal for emotional reasons rather than shareholders' interests.

However, once Yahoo stock tumbled and shareholders expressed ire, he relented in an interview with Bloomberg that he and board members would still be open to selling to Microsoft - or anyone else, for that matter - if the price were right.

Yang also said, in an interview with the Financial Times, that it was Microsoft, not Yahoo, that walked away from the deal; his company was still willing to negotiate on price, he said.

Decker, too, said price was the deal breaker, yet she defended Yang against allegations that he hadn't put shareholders first during negotiations with Yahoo.

"Absolutely the sole guiding light in this process was maximising shareholder value," she said.

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Elizabeth Montalbano

Computerworld
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