.NET Developments

May 5 2008   10:34AM GMT

Yahoo! It’s over!

Yuval Shavit Profile: YuvalShavit

Microsoft has abandoned its effort to purchase Yahoo for $44.6 billion. Yahoo vigorously rebuffed the offer, first launched in February. In announcing the withdrawn offer, Microsoft CEO Steve Ballmer disclosed that the company had increased its initial bid.

“Despite our best efforts, including raising our bid by roughly $5 billion, Yahoo! has not moved toward accepting our offer. After careful consideration, we believe the economics demanded by Yahoo! do not make sense for us, and it is in the best interests of Microsoft stockholders, employees and other stakeholders to withdraw our proposal,” Ballmer said in a statement.

This deal would have moved Microsoft far deeper into a Web Advertising market in which it has trailed both Google and Yahoo. Viewers suggest it well could have shifted the company’s emphasis away from its successful software businesses.

It is not completely certain that the merger machinations are wholly over – as Ballmer’s comments point primarily to pricing as the obstacle to completing the deal. Both Microsoft and Yahoo in the wake of this clumsy dance of courtship.

Some comment from the blogosphere:

According to Stephen Bainbridge. Big shareholders wanted a deal, “but not one that required Microsoft to overpay. In addition, press reports suggest that some of Microsoft’s largest shareholders were pressuring the firm not to overpay.”

Andrew Brust says it’s not over ‘til it’s over. “Microsoft’s withdrawal of its Yahoo acquisition proposal may just be a negotiating tactic.  Or it could in earnest.  Time will tell.”

And, the crack blogger MiniMicrosoft chimes in as well. “With this strategic inflection point, the era of post-BillG Microsoft 2.0 has begun.”

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