Microsoft can build a competitive online advertising business without Yahoo but it “could just take more time,” CEO Steve Ballmer told the Wall Street Journal in an interview published yesterday.
The comment came as analysts and industry watchers awaited an imminent announcement on Microsoft’s next move in its unresolved quest to acquire Yahoo as part of a strategy to compete with Internet advertising king Google.
Ballmer declined to say how Microsoft would react to Yahoo’s rejection of its unsolicited US$44.6 billion bid or when the company would announce a decision.
“With the right circumstances it’ll happen. Without the right circumstances it won’t happen,” Ballmer told the Journal.
Citing inside sources, the paper said the software giant was now leaning toward a hostile bid, with an announcement likely yesterday.
Ballmer told employees on Thursday he would not pay “a dime above” what he thinks Yahoo is worth and they would know the next move in the takeover quest “in very short order.”
“I know exactly what I think Yahoo is worth and I won’t go a dime above,” Ballmer said during an in-house exchange with employees posted on the Internet.
Analysts and others have spent the week eagerly awaiting Microsoft’s next move in a saga that began when Microsoft made its unsolicited offer on February 1.
Microsoft gave Yahoo until April 26 to accept the offer but the California Internet pioneer let the deadline pass without response.
“We’ve got basically the three big options in front of us,” Ballmer told the internal forum.
“There’s the friendly deal, there’s an unfriendly deal, and the third path is simply to walk away. We ought to announce something in very short order.”
A source close to Yahoo said the firm is awaiting Microsoft’s move.
“We are all staying tuned,” the source said. “It is pretty clear they will have to raise their offer. Clearly, they need the company.”
The Wall Street Journal said on Wednesday that Microsoft’s board had “indicated a willingness” to increase its initial US$31-per-share offer to US$33.
That might not be enough to consummate the deal, said Canaccord Adams analyst Colin Gillis.
“Yahoo has said they are open to any deal with anyone, even Microsoft, at the right price,” Gillis said. “From a shareholder angle the US$35 price target seems to be the number.”
A meeting of Microsoft’s board on Wednesday reportedly ended with directors divided regarding Yahoo.
“The prevailing thought is the board has given Ballmer some leeway to make the deal and doesn’t want to do a hostile takeover,” Silicon Valley analyst Rob Enderle said.
“I have a hard time thinking Microsoft can put this together. Yahoo’s expectations are still unreasonable and I don’t think Microsoft has the resources to make it work,” he said.
Every dollar added to the per-share bid bumps the price of buying Yahoo by slightly more than US$1 billion. Yahoo’s board has said it believes the firm is worth US$40 per share.
Ballmer told employees that Microsoft is “100 percent determined” to wrest Internet market share from search and advertising king Google.
“The world hopes that there’s a very strong company that’s not the number one guy,” Ballmer said. “We’re going to work that strategy with Yahoo or without Yahoo. Yahoo’s not a strategy; it’s a part of a strategy.”
Microsoft is eager to merge online resources with Yahoo to take on Google, which dominates the lucrative Internet search advertising that is expected to grow to US$80 billion annually worldwide in the next two years.