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Microsoft 'Done' With Yahoo, Ballmer Says

The Microsoft CEO dismissed Yahoo as a major player in the Internet business, despite previously offering more than $40 billion for the company.

Paul McDougall

July 25, 2008

2 Min Read

Microsoft's on-again, off-again pursuit of Yahoo is off again -- sort of, maybe. Speaking to investment analysts Thursday, Microsoft CEO Steve Ballmer said that his company is no longer interested in acquiring the Internet portal. "We're done, we can move on," said Ballmer.

Ballmer, however, qualified the statement in his next breath. "Does that mean that nobody will ever talk to anybody again? I suspect that the answer to that question is also no," said Ballmer. "It's a long time and a big world," he added.

Ballmer called Microsoft's proposed acquisition of Yahoo, which was rejected by Yahoo's board, "a tactic" for growing its search advertising business, "not a strategy."

"Ante up, focus, reinvent the innovation, the investment in semantic expertise, that's the strategy," said Ballmer.

Ballmer also appeared to dismiss Yahoo as a major player in the Internet business, even though he previously offered more than $40 billion for the company. "I think what we really still have in search and advertising is a two-horse race," said Ballmer, referring to Microsoft and rival Google.

"Yahoo will stay around. I'm sure they'll find their path. And yet, for the kind of ante we're talking about in this game, I think it really is just the two of us," he said.

Yahoo said Monday that it had reached a settlement with Carl Icahn under which the billionaire investor agreed to drop his fight for control of Yahoo's board as part of his effort to force a deal with Microsoft.

Under the agreement, Icahn -- who owns about 5% of Yahoo's shares -- will get a seat on Yahoo's board and is entitled to recommend individuals from a list of nine candidates for two additional board seats. Yahoo's board expands from nine members to 11 members as part of the arrangement.

Yahoo said that eight of its current board members, including chairman Roy Bostock and CEO Jerry Yang, will run for reelection at its Aug. 1 shareholder meeting in San Francisco. Current board member Robert Kotick has decided to vacate his position, Yahoo said.

About the Author(s)

Paul McDougall

Editor At Large, InformationWeek

Paul McDougall is a former editor for InformationWeek.

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