Microsoft Corp. world’s largest software maker walked away from its Yahoo bid because both parties had disagreement on price. It will be a setback for Microsoft who were trying to get Yahoo to counter Google in online advertising. They agreed to raise Yahoo bid to $33 per share but Yahoo demanded $37.
Steve Ballmer, Microsoft CEO issued the following statement:
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.
Microsoft, whose Internet business lost $228 million last quarter, now faces the challenge of finding alternatives to buying Yahoo, a purchase that would have tripled its share of the U.S. Web search market. The decision also leaves Yahoo CEO Jerry Yang to prove he can revive sales growth and the stock price by keeping the company independent.
Ballmer and deputy Kevin Johnson met yesterday in Seattle with Yahoo co-founders Yang and David Filo, two people familiar with the talks said. Yang and Filo refused to accept less than $37 a share and flew back to California. Ballmer called Yang to inform him of the decision just before it was announced, the people said.
Laura Martin, an analyst at New York- based Soleil Securities Corp. said:
Unbelievable, this is management putting its employees and its job security ahead of current Yahoo shareholders’ interest.
She estimated Yahoo shares will fall $8, or 28 percent, tomorrow as Microsoft’s withdrawal, combined with concern about the economy and the advertising market, weigh on investors.
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