Microsoft News Tracker

The long running soap opera of Microsoft’s attempted acquisition of Yahoo ended after a week of hectic negotiations yesterday as Steve Ballmer withdrew the offer. The fundamental reason was a disagreement on price (Microsoft’s last bid was $33 per share and the lowest Yahoo would go was $37), but Yahoo’s threat of a search ad outsourcing deal with Google proved so much of a poison pill that Microsoft did not care to pursue a hostile takeover.

The two protagonists now get to lick their wounds and pursue their own separate paths to online riches. It’s in the nature of the US legal system that Yahoo’s management and board of directors will be sued for not taking the cash when they could, but worse is the very public acknowledgement of the fundamental weakness of Yahoo’s search ad business. As for Microsoft, despite the happy talk that a Yahoo acquisition would merely have sped up Microsoft’s inevitable success in the online business, the Microsoft employees concerned know that they barely escaped a "synergy" bloodbath which is hardly a vote of confidence. Moreover, if Yahoo’s prospects don’t improve, this may turn out to be merely a merger delayed.