Sunday, April 27, 2008

Microsoft faces critical decision over Yahoo

Go to Financial Times original
Microsoft faces a critical decision in its three-month pursuit of Yahoo this week after its latest attempt to bring the embattled internet company to the negotiating table looked to have failed over the weekend.

The pressure on Microsoft to act mounted after Yahoo called the software company’s latest bluff, refusing to be drawn into takeover talks in spite of a three-week ultimatum that expired on Saturday.

The continuing stalemate has forced Microsoft to confront the decision of whether to mount an outright hostile bid, something it has threatened almost from day one but has shied away from out of fear of alienating Yahoo employees and angering shareholders who have been hoping for a higher price.

Microsoft executives said last week that another option would be to drop the unsolicited offer altogether, though that is considered unlikely. Steve Ballmer, Microsoft’s chief executive officer, had threatened to take Microsoft’s offer direct to Yahoo’s shareholders, and perhaps even to cut the price, if the internet company didn’t start talks by Saturday. He did not immediately follow through with that threat, leaving more time for Yahoo to start talks before the end of the weekend.

However, two people familiar with the situation said that there were no negotiations under way as of Sunday morning on the West Coast, and that there had not been any discussions between the two sides for several days.

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