Yahoo shares jump as Microsoft comes sniffing

by Stevie Smith - Apr 14 2009, 15:00

Moving and shaking on the share price front this week after Microsoft’s reportedly renewed interest in forging an advertising partnership with Yahoo led to a sudden value boost of 6.5 percent for the struggling Internet pioneer.

The value increase came on the heels of a Wall Street Journal report posted on Monday that suggested new discussions between Yahoo CEO Carol Bartz and Microsoft CEO Steve Ballmer were also focusing on a joint advertising deal whereby Yahoo would tackle display advertising while Microsoft would handle search-based advertising.

Microsoft’s revived interest in acquiring Yahoo – or at least purchasing its advertising business – has come about since Bartz replaced prior CEO Jerry Yang at the beginning of the year and revealed a willingness to return to the negotiating table.

"The fact of the matter is, these two guys [Microsoft and Yahoo] should somehow figure out how to get together and create more competition for this guy [Google]," commented Ballmer to WSJ when Bartz took the helm at Yahoo in January.

"And I'm hoping perhaps that that's a reasonable conversation to have with new management at Yahoo as Carol comes onboard," he added.

An initial purchase bid of $47 billion USD put forth by Microsoft in 2008 was repeatedly snubbed by Yang, who believed it to be well below Yahoo’s true value – a stubborn position that left shareholders disgruntled and the board facing the possibility of a hostile takeover.

However, that action did not emerge as Microsoft promptly shelved its interest, leaving analysts to speculate that the rebuffed software giant would return at a later date if and when Yahoo’s share value fell well below the $47 billion USD offer. Yahoo’s share value plunged soon thereafter, leading to Yang’s departure and Bartz’s arrival.

While it remains to be seen if Bartz and Ballmer successfully hammer out a full acquisition agreement, initial industry reaction to the reported talks points to Microsoft being eager to add Yahoo’s 20.6 percent share of the online advertising market to its own eight percent as it works to haul in market leader Google.

Want regular updates from The Tech Herald? Follow us on Twitter.

The Tech Herald: Microsoft walks away from bitter Yahoo acquisition deal

The Tech Herald: Bartz prepares for executive shake-up at Yahoo

Around the Web