Ballmer: Yahoo still in Microsoft's sights

by Jeremy Kirk

March 3, 2008 —

Microsoft still has
its eye on Yahoo, but CEO
Steve Ballmer would not say Monday whether the company plans to pursue a proxy
fight to remove Yahoo's board.

Ballmer confirmed "a range of dialog" and "alternatives"
under discussion with Yahoo, whose executives spurned Microsoft's initial US$44.6
billion cash-and-stock offer, posing the question of whether Microsoft would
pursue a hostile takeover. The worth of Microsoft's offer has declined by several
billion dollars as the company's share price has dropped over the past few weeks.

"I think it's important for me not to get into the detail," said
Ballmer, who gave a keynote speech at the Cebit technology show in Hanover,
Germany. "We still think the deal makes sense. We hope over time that becomes
a reality."

Ballmer, whose company presented the unsolicited offer for Yahoo on Feb. 1,
said the bid has merit for the companies' shareholders, advertisers, publishers
and consumers.

Microsoft hopes that a deal will bring it the engineering resources and Web
savvy that has made Yahoo one of the most recognizable Web brands and eventually
allow Microsoft to better compete in the online advertising market with Google.

Yahoo has also been struggling against Google and been plagued by mediocre
financial results in addition to turmoil in its management ranks. However, CEO
Jerry Yang has told employees not to be distracted by the bid and to stay focused.

Ballmer said Microsoft remains "fully engaged" with Yahoo and maintained
the two companies together have the potential to create a lot of value.

"Ultimately, Yahoo's management's going to have a perspective on that,
Yahoo's board will have a perspective on that and Yahoo's shareholders,"
Ballmer said. "We are trying to have appropriate levels of engagement with
all three of those constituencies as well as with other industry participants."

IDG News Service