Microsoft in Quandary over Yahoo bid as key deadline passes

By xXxZxXx
Apr 28, 2008
  1. SAN FRANCISCO(AP) Microsoft Corp. is no closer to buying Yahoo Inc. than when it made its $44.6 billion bid nearly three months ago, leaving the software maker in a quandary over whether the deal is still worth pursuing.

    A decision is likely to emerge in the next few days, with Yahoo facing a weekend deadline to accept the offer. Although the deadline expired Saturday, Microsoft has indicated it probably won't reveal its next move until early this week.

    The tense mating dance is at a standstill because Yahoo's board has repeatedly said it won't sell to Microsoft for less than $45 billion, even though the bid hoisted its stock shortly after it hit a four-year low in late January.

    The impasse has left most analysts predicting Microsoft will either sweeten its offer or attempt to replace Yahoo's board with a slate of directors who will embrace a takeover.

    But the architects of Microsoft's bid _ Chief Executive Steve Ballmer and Chief Financial Officer Chris Liddell _ have been signaling the Redmond, Wash.-based company might abandon the bid and leave Sunnyvale-based Yahoo twisting in the wind.

    The public remarks of Ballmer and Liddell could be just part of a negotiating ploy aimed at pressuring Yahoo to the negotiating table.

    But some analysts think Microsoft would be smart to walk away now.

    By turning a cold shoulder, Microsoft could position itself to return with another bid this summer in hopes of completing the acquisition without suffering through the disruption and rancor likely to erupt if Microsoft were to try to oust Yahoo's board in a risky process known as a proxy contest.

    This scenario could only pan out if Microsoft is correct in its belief that Yahoo is stuck in a downward spiral after steadily losing ground in the online advertising market during the past two years.
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