Ballmer backs ad deal in theory

 

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By Reuters

Posted on 17 Oct 2008 at 08:18

Steve Ballmer says a search advertising deal with Yahoo makes economic sense and may still be possible, though the two sides are not in any discussions.

Shares of Yahoo jumped as much as 17% as investors hoped Ballmer's comments could lead to the two sides returning to the negotiating table. But gains were pared back to about 12% after Microsoft issued a statement saying it had no interest in buying Yahoo.

Talks between the two broke off in July after Yahoo rejected Microsoft's proposal to buy its search advertising business and enact a revenue-sharing partnership.

Yahoo had also rebuffed in May a full acquisition bid from Microsoft that was priced at $33 per share, or $47.5 billion. Instead, Yahoo signed a search advertising pact with Google, which is being scrutinised by regulators.

"Perhaps there will continue to remain opportunities to partner around search," Ballmer told a conference in Florida.

"We are not in any discussions with them. We'll see. They want to remain independent. There are probably still opportunities around search. I think it would still make sense economically for their shareholders and ours."

Since talks broke off, Yahoo shares have plunged to a 5 year low of $11.37, weighed by concerns over the outlook for web display advertising, as major advertisers such as banks and automakers cut back spending.

"We offered 33 bucks not too long ago and it's 11 and a half. So I don't know what price might have got the job done," Ballmer said, responding to a question on whether Microsoft might take another stab at buying Yahoo now that its stock price is so low.

"It's clear that Yahoo did not want to sell the company. It did not want to sell when we offered 33 ... They probably think it's worth at least 33 today."

Yahoo declined to comment. Its shares rose to as high as $13.73 on Thursday, before settling at around $13.16 in late trading on the Nasdaq.
"Our position hasn't changed. Microsoft has no interest in acquiring Yahoo; there are no discussions between the companies," a spokesman for Microsoft said in a statement.