VOL. 123 | NO. 228 | Thursday, November 20, 2008
Ballmer Dismisses Yahoo Buyout But Open on Search
By JESSICA MINTZ | AP Technology Writer
BELLEVUE, Wash. (AP) - Microsoft Corp. is no longer interested in buying all of Yahoo Inc., CEO Steve Ballmer said Wednesday, though he told shareholders that the company would still be "very open" to a collaboration on Internet search. His comments sent Yahoo shares diving by 19 percent.
"Let me be clear," Ballmer said at Microsoft's annual shareholder meeting. "We are done with all acquisition discussions with Yahoo."
Yahoo spurned a $47.5 billion takeover offer from Microsoft in May, and later rejected Microsoft's bid to buy only its search engine. Ballmer has said repeatedly of late that the buyout remains off the table, though a search-related deal is possible.
But Wednesday marked the first time he had renewed that stance since the resignation announced this week by Yahoo CEO Jerry Yang, who had resisted Microsoft's overtures. Yahoo shares rose when Yang said he would step aside, because investors hoped it meant a deal with Microsoft would now be more likely.
Ballmer said the companies are not currently talking about a search deal.
Yahoo shares plummeted $2.20 to $9.35 in afternoon trading, well below the $33 per share that Microsoft offered in May. Microsoft shares tumbled 57 cents, 2.9 percent, to $19.02. The shares hit a 10-year low of $18.74 last week.
Michael McDonald, a shareholder who flew from Atlanta to attend the meeting, blames Microsoft's run at Yahoo for depressing its share price and hopes the software maker doesn't try again.
McDonald, a retired advertising executive, called the race to win in Web search and advertising "the dot-com bubble all over again. The economic period we're in now is going to prove the questionable value of search."
Instead, he'd rather see Microsoft cut employees and expenses, or spend cash to buy business software companies.
"We don't need three Googles," he said.
Some analysts have interpreted Ballmer's public comments about a Yahoo buyout as negotiating posturing, and suspect Microsoft might still want to grab Yahoo at a low price, in hopes of improving their joint position in online search and advertising. However, analysts have also said Microsoft is likely to wait until next year before deciding, giving it time to watch Yahoo's performance and study the antitrust regulatory climate in a new administration in Washington.
In his remarks, Ballmer attempted to reassure shareholders that Microsoft can thrive despite the economic downturn, citing the software maker's long-term research and development spending and new products that mix desktop software and over-the-Internet computing.
When a shareholder, alluding to Microsoft's languishing stock price, asked Ballmer when Microsoft's best years would arrive, the CEO countered that every year is Microsoft's best year. Then he jokingly added, "If we could get this economic thing headed in the right direction ... I'm not going to pretend we have control over that. You'd better call D.C."
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