Microsoft's Ballmer Signals Renewed Interest In Yahoo - InformationWeek

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Microsoft's Ballmer Signals Renewed Interest In Yahoo

CEO says there is "a good opportunity" for the two companies to complete a search deal.

Microsoft CEO Steve Ballmer said Thursday that he remains interested in acquiring Yahoo's Internet search and advertising unit.

"Over time, there's still a good opportunity to do a deal," said Ballmer, speaking at a media summit in New York City. Yahoo shares jumped 2.68% to $13.78 in midday trading on word of Ballmer's comments, which were reported by the Dow Jones news service. Microsoft was up 0.83% to $17.10.

Ballmer's remarks reinforce comments made in January by Yahoo CEO Carol Bartz, who replaced Ballmer foe Jerry Yang in January, indicating that a Microsoft-Yahoo deal might still be on the table. Bartz told company employees that she would investigate whether a sale of Yahoo's search business makes sense. She also has reportedly met informally with Ballmer himself.

Ballmer said repeatedly in late 2008 that Microsoft was no longer interested in acquiring all of Yahoo, but that the company is open to a narrower deal. Adding Yahoo's search operations to its MSN and Live Search network could help Microsoft close the gap with industry leader Google in the lucrative Internet search market.

Yahoo is currently the No. 2 player, with Microsoft a perennial third despite recent acquisitions -- including a $1.2 billion deal for Norway's Fast Search & Transfer -- meant to bolster the company's position.

Adding to speculation that Microsoft is still intent on integrating Yahoo's search operations is the company's December hiring of Qi Lu, who was Yahoo's engineering VP for search and advertising technology. Microsoft named Lu head of its online services unit.

Yahoo shares have been volatile in recent months as investors react to the rumor mill and apply Kremlinesque analysis to even Ballmer's most offhanded comments. The stock plunged more than 13% on Nov. 7 after Ballmer told attendees at a business lunch that he was no longer interested in acquiring Yahoo outright.

Microsoft last year offered to purchase Yahoo for $31 per share, but talks between the companies ultimately broke off amid growing animosity between Ballmer and then Yahoo CEO Yang.


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