Having abruptly left Yahoo! at the altar over the weekend, Microsoft’s Steve Ballmer is now under the gun to do something with the $46 billion check he was prepared to write the Internet target’s shareholders.
Sources close to Microsoft said the software giant has been exploring a variety of options, including everything from buying a social networking site like Facebook or MySpace to doing a huge share buyback.
“We now have a $46 billion kitty that we can use for acquisitions, growing organically and doing strategic business partnerships,” said one person close to the software giant. “Nothing is off the table.”
Sources said Microsoft has held preliminary talks with Time Warner about possibly acquiring its AOL unit, but has been in much more active talks with News Corp., which also owns The Post, about doing a strategic deal with MySpace.
“Although the acquisition of Yahoo! would have accelerated our ability to deliver on our strategy in advertising and online services, I remain confident that we can achieve our goals without Yahoo!,” Ballmer wrote in an e-mail to employees on Saturday.
Buying AOL could also be tough because Google already has a small stake in the company. Still, AOL does represent a “credible alternative to Yahoo!,” Susquehanna analyst Marianne Wolk wrote last week.
Yahoo! shares are expected to get pummeled today and irate shareholders are expected to voice their disappointment with CEO Jerry Yang’s failure to get a deal done. “With this deal off the table, there’s pressure on Yahoo! to respond,” said one banker not involved in the talks.
Sources said Yang could announce a deal to carry search advertisements from Google within the next week.
While that could boost the company’s annual cash flow to $1 billion or more and Yahoo! could do a big share buyback, most analysts believe it would not boost Yahoo!’s share price above the $33 that Microsoft was willing to pay.
Yahoo! shares closed at $28.67 on Friday.