Microsoft presses Yahoo! as deadline looms

by Nikki Sandison, Brand Republic 25-Apr-08, 15:45

LONDON - Microsoft has issued Yahoo! with a final warning ahead of its deadline this weekend, claiming that it will take its bid to the shareholders or call it off altogether if Yahoo! maintains 'unrealistic expectations' of a better deal.

Chris Liddell, chief financial officer at Microsoft, said in a conference call yesterday that if no deal is reached by this weekend Microsoft will reconsider its $44.6bn (£22.5bn) offer and reveal new plans next week.

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

He also rejected Yahoo!'s argument that it is worth more than $31 a share.

Liddell's warning echoes a threat made by Microsoft chief executive Steve Ballmer at a conference near Milan on Wednesday when he said that Microsoft would withdraw its offer if Yahoo! does not start negotiating.

Ballmer also said that Yahoo!'s better than expected first-quarter results, reported on Tuesday, had not changed Microsoft's opinion of its value.

Yahoo! reported a nearly four-fold increase in net income to $542m (£272.6m), due solely to gains from its share in Chinese portal AliBaba.

Yahoo! has said that it is open to considering a deal with Microsoft, among other alternatives, but only if Microsoft increases its offer.

Microsoft views the capture of Yahoo! as a way to compete with Google in the internet search and advertising markets.