Microsoft ups ad revenue, repeats Yahoo warning

by Tristan O'Carroll, Media Week 25-Apr-08, 14:50

LONDON - Microsoft has again warned Yahoo that it might call off its $44.6bn (£22.5bn) pursuit of the company.

Microsoft first approached Yahoo with a takeover proposal in January, but has met stiff resistance from Yahoo. The company has unveiled a string of initiatives aimed at convincing shareholders of the merit of resisting Microsoft ownership.

Unveiling its financial results for the first quarter of this year, chief financial officer Chris Liddell said if no deal is reached by this weekend, Microsoft will reconsider its offer and reveal new plans next week.

Liddell said: "Unless we make progress with Yahoo towards an agreement by this weekend, we will reconsider our alternatives. These alternatives clearly include taking an [hostile] offer to Yahoo shareholders or to withdraw our proposal and focus on other opportunities both organic and inorganic."

He added that: "With or without a Yahoo combination", Microsoft intends to ramp up its presence in the online advertising market, adding that Microsoft aims to capture more of the expected $80bn (£40bn) in online advertising spend that is predicted by 2010.

Microsoft's results reveal that its online services business, which houses among other units its display and search operations, increased global revenues by 40% during Q1 2008, compared with the same period in 2007.

Global online advertising revenue increased by $175m (£88m), or 39%, to $619m (£85m)during the quarter, boosted by its acquisition of digital marketing outfit aQuantive.