Tuesday, February 19, 2008

Yahoo may warm to Microsoft as rival suitors fail to impress

Microsoft, the world's biggest software maker, may succeed in fighting off rival suitors for Internet search company Yahoo because they can't offer as much to Yahoo's shareholders.

Yahoo, seeking alternatives to Microsoft's $44.6 billion bid, is in talks with News Corp, a person familiar with the discussions said.

London's Sunday Telegraph reported that Time Warner's AOL is in talks with Yahoo. A partnership won't help regain the lead in search from Google, said Canaccord Adams's Colin Gillis in New York.

"All this talk about Yahoo combining with AOL or News Corp is just noise," said Gillis, who advises investors buy Yahoo shares. "You're not curing any weaknesses. Shareholders would have a hard time loving a combination like that."

Microsoft would more than double its share of Internet searches in buying Yahoo, and save as much as $1 billion a year by reducing overlap in their operations.

Yahoo Chief Executive Officer Jerry Yang has resisted Microsoft's advances, pursuing another partner to keep his company independent.

Source : Economic Times