Archive for the ‘Bid’ Category
May 5 (Bloomberg) — Microsoft Corp.‘s decision to drop its pursuit of Yahoo! Inc. increases the pressure on Chief Executive Officer Steve Ballmer to make his money-losing Internet business succeed against Google Inc.
Ballmer’s bid for Yahoo, the most-visited Web site, signaled that Microsoft was making little progress against Google in Internet search advertising, said Charles Di Bona, a Sanford C. Bernstein analyst. Ballmer withdrew his bid over the weekend after Yahoo refused a sweetened offer of almost $50 billion in stock, leaving investors asking what his online strategy will be.
“They’ve got to come out sooner rather than later with a pretty well articulated vision,” said New York-based Di Bona.
The danger for Microsoft is that Google, owner of the most popular Web search engine and winner of the most online advertising dollars, will expand its dominance while Ballmer plans a new course. Google gained 10 percentage points of market share in Internet queries since June, providing 59.8 percent of the searches done in March, according to researcher ComScore Inc. in Reston, Virginia.
Ballmer and Kevin Johnson, president of Microsoft’s Internet unit, met two days ago in Seattle with Yahoo co-founders Jerry Yang and David Filo, two people familiar with the negotiations said. Redmond, Washington-based Microsoft, the largest software maker, offered to raise its $44.6 billion bid by about $5 billion, to $33 a share. Yang and Filo refused to accept less than $37 a share, the people said.
Microsoft was probably right to walk away because its return from the purchase would have been too small if it had paid more than $35, Di Bona said.
`Square One’
The text promotions that run next to search results account for more than half the $41 billion market for Internet ads. With Yahoo, Microsoft would have tripled its share of U.S. online searches and would have become the biggest seller of graphical- display ads on the Internet.
Smaller acquisitions and investments in technology may not be enough to reverse the fortunes of the Internet unit, which lost $228 million last quarter.
“They’re back to square one,” said Chris Hickey, an analyst at London-based Atlantic Equities who recommends holding Microsoft shares. “The fact that Microsoft wanted to do this deal shows what a difficult position they’re in to start with. This reminded investors of Microsoft’s poor market position and the long-term risk to its business from online competitors.”
Yahoo Shares
Microsoft fell 16 cents to $29.24 May 2 in Nasdaq Stock Market trading. The shares have dropped 18 percent this year amid concern that sales of Microsoft’s Windows software, which runs more than 90 percent of the world’s personal computers, are slowing and that buying Yahoo would prove expensive.
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Microsoft said Saturday that it was abandoning its blockbuster bid to acquire Yahoo after the two companies could not agree on a price.
The breakdown in the talks followed a meeting on Saturday morning in Seattle between Microsoft’s chief executive, Steven A. Ballmer, and Yahoo’s chief and co-founder, Jerry Yang, according to a person briefed on the discussions.
At the meeting, which also included Yahoo’s other co-founder, David Filo, and Kevin Johnson of Microsoft, Mr. Ballmer increased Microsoft’s offer to $33 a share, but Mr. Yang said Yahoo would not sell for less than $37 a share, this person said.
Microsoft’s decision to walk away is the latest chapter in a three-month-old standoff that began when Microsoft made an unsolicited offer to acquire Yahoo in an effort to compete more effectively with Google in Web search, advertising and services.
Yahoo rejected Microsoft’s offer repeatedly, saying it undervalued the company. Microsoft at times threatened to lower its offer, originally valued at $44.6 billion, or $31 a share.
In a letter to Mr. Yang that Microsoft released Saturday evening, Mr. Ballmer said that it would not make sense for Microsoft to pursue a lengthy proxy fight. “Our discussions with you have led us to conclude that, in the interim, you would take steps that would make Yahoo undesirable as an acquisition for Microsoft,” he wrote.
Mr. Ballmer said in a separate statement that Microsoft would continue to pursue its online efforts on its own.
“We have a talented team in place and a compelling plan to grow our business through innovative new services and strategic transactions with other business partners,” he said. “While Yahoo would have accelerated our strategy, I am confident that we can continue to move forward toward our goals.”
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Microsoft’s chief executive, Steven A. Ballmer, in persuasion mode before a technology fair in March. Mr. Ballmer is said to have made calls recently with a pitch to large Yahoo shareholders.
Microsoft’s directors met Wednesday to discuss how to proceed with the company’s attempted takeover of Yahoo, according to a person briefed on the discussions.
The board was expected to consider a range of options, including Microsoft raising its offer in an attempt to break the stalemate between the companies, this person said.
In recent days, Microsoft has considered increasing the bid, currently valued at $29.06 a share, to $32 or $33, said this person, who asked not to be identified because he was not authorized to speak about the discussions.
Microsoft’s chief executive Steven A. Ballmer, has personally called some large Yahoo shareholders to get their support for a bid in that range.
But Microsoft executives have been frustrated by signs that such shareholders are holding out for an even higher offer — in the range of $35 to $37 a share. Without that higher offer, those shareholders have been unwilling to press Yahoo’s management into entering serious negotiations, this person said.
A Microsoft spokesman declined to comment.
Earlier in April, Mr. Ballmer threatened to start a proxy fight to oust Yahoo’s board if the two companies did not reach a negotiated deal by April 26. The deadline passed without an agreement or substantive negotiations between the companies.
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