Ballmer: Microsoft could walk away from Yahoo deal

Microsoft gave its first hint that it may abandon its $44.6
billion bid for Yahoo, as it approaches the deadline for a threatened
proxy battle to oust Yahoo's board.

At a conference in Milan on Wednesday, CEO Steve Ballmer said Microsoft is
"prepared to move forward without merging with Yahoo," according to
a transcript provided by the company.

Ballmer again repeated that acquiring Yahoo is essential for enabling Microsoft
to succeed in the online advertising business, where both companies have been
chasing Google.

"Today Google has the lead, there's no doubt about it and I wanna make
sure that they have plenty of competition," Ballmer said. "We think
the best way to move that forward quickly is to come together with Yahoo. I
hope that it works, but if it doesn't we go forward alone."

Ballmer's comments come as Yahoo is facing a Microsoft-imposed deadline of
Saturday for accepting the deal. Ballmer warned earlier this month that Microsoft
would then try to replace Yahoo's board of directors in order to take the bid
directly to Yahoo's shareholders.

Yahoo has maintained it has considered the offer but claims it undervalues
the company. Both companies have traded sharp barbs in successive public letters
over the deal.

Since Microsoft's offer became public Feb. 1, Yahoo has scrambled to portray
itself as a nimble company with potential and improving financial performance.

On Tuesday, Yahoo reported net income of US$542 million, or $0.37 per share,
for its first quarter of 2008. That's up from $142 million, or $0.10 per share,
from the same period a year earlier.

Yahoo has courted other suitors, including Time Warner's AOL, as a possible
merger partner in order to fend off Microsoft. Yahoo also struck an agreement
with Microsoft's arch nemesis, Google, to display Google's text ads next to
Yahoo searches for a trial period of around two weeks.

Further complicating the deal were rumors that Microsoft was in talks with
News Corp., owner of the Wall Street Journal and the social networking site
MySpace, to make a joint bid for Yahoo.

IDG News Service

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