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10/16/2008
03:45 PM
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Yahoo Stock Bolstered By Microsoft CEO's Comments

Microsoft disavows interest in its previous financial offers but comments about "continuing opportunities" by Steve Ballmer suggest otherwise.

Looks like Microsoft may not be totally finished with its dealings with Yahoo.

Yahoo's stock had surged 12% by 3:00 p.m. EST on Thursday, a rise that Bloomberg News attributes to comments by Microsoft CEO Steve Ballmer expressing interest in a Yahoo acquisition.

According to Bloomberg News, Ballmer, at a Gartner conference in Orlando, Fla., said there may be "continuing opportunities" for a search partnership with Yahoo, even as he noted there are no discussions between the two companies at the moment.

In an effort to clarify Ballmer's remarks, Microsoft issued a statement on Thursday to further distance the possibility of a deal. "Our position hasn’t changed," the company said. "Microsoft has no interest in acquiring Yahoo; there are no discussions between the companies."

Yahoo's stock on Wednesday dropped below $12 per share, far below the $33 offer Microsoft couldn't get Yahoo to accept earlier this year.

In an article on Silicon Valley Insider on Wednesday, financial analyst Henry Blodget called this a ridiculous valuation given Yahoo's real worth.

"Yahoo has a global audience of 500 million people," Blodget said. "It is trading at well below replacement value (spend $15 billion, and you could not build a new Yahoo today--not one with this global reach and brand). Wringing compelling upside out of the stock at $12 is not rocket science. At this price, it's not even basic arithmetic."

While the financial world waits to see how the Microsoft-Yahoo soap opera will end, it's also waiting to see whether Yahoo will be allowed to go ahead with its advertising partnership with Google. Google and Yahoo have reportedly been talking with the U.S. Department of Justice in an effort to prevent an antitrust lawsuit.

The Google-Yahoo ad deal, which will allow Google to serve ads on Yahoo search results pages, was originally supposed to begin this month, but it has been temporarily postponed to allow more time to discuss the arrangement with the Justice Department.

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