AFI BLOG: Media and Technology

The Wall Street Journal

Software Giant Cites Divide Over Price; The Google Factor

Yahoo Inc. Chief Executive Jerry Yang didn’t really want Microsoft Corp. to buy his company. By Saturday, Microsoft CEO Steve Ballmer didn’t want that either, leaving both technology giants facing fundamental questions about their futures.

The failed courtship leaves Microsoft with limited options for quickly expanding its presence online. However, it might not close the door to the software maker’s pursuing another bid for Yahoo down the road.

In a letter to Mr. Yang Saturday in which he withdrew Microsoft’s acquisition offer, Mr. Ballmer cited a divide over price, saying Microsoft had been willing to raise its offer for Yahoo to $33 a share, or about $47.5 billion, and Yahoo demanded at least $4 a share more.

Microsoft’s pursuit of Yahoo was among the latest moves in the scramble by technology and media companies to capture the flood of advertising dollars moving online and to block Web powerhouse Google Inc. from extending its dominance in online-search advertising.

Mr. Ballmer had said in recent days that he was confident Microsoft could go it alone to build a competitive online-advertising business without buying Yahoo. At the same time, he had faced skepticism from within Microsoft about its ability to pull off such a large acquisition at a time when the software maker faces many other challenges. Mr. Ballmer himself had shown hints of such doubts in recent weeks, said people familiar with the matter.

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