Business

YAHOO! SETS REPLY TO MICROSOFT ATTACK

Yahoo!’s board of directors was still huddled late yesterday evening plotting a response to Microsoft CEO Steve Ballmer’s three-weeks-or-else deal ultimatum.

A person familiar with the situation said a statement was expected to be released quickly. As of press time, there was no official word from Yahoo!

The company is expected to largely rebut many of the arguments put forth by Ballmer in his letter to Yahoo!’s board on Saturday, this source said.

In his letter, Ballmer expressed frustration that Yahoo!’s board had not authorized management to begin formal negotiations with Microsoft and hinted that he would consider lowering its $31 per share offer if the Redmond, Wash.-based software giant is forced into a proxy contest.

Microsoft’s move is not likely to have the intended effect of coercing Yahoo! to the bargaining table, however.

According to the person close to the situation, Microsoft’s very adamant public position of not raising its bid price, which values Yahoo! at $42 billion, is at odds with the company’s frustration over a lack of negotiations.

“If they aren’t willing to raise their offer, what’s there to negotiate?” the person said.

Though Yahoo! isn’t having what Ballmer would call “meaningful” talks with Microsoft, it continues to sit down with Time Warner and News Corp. Indeed, discussions with both companies are continuing, sources said over the weekend. (News Corp. owns The Post.)

According to sources, Time Warner is working with JPMorgan Chase on a deal in which it would merge AOL into Yahoo! and simultaneously acquire just under 20 percent of the new entity, which wouldn’t require a shareholder vote.

That possibility seems to have caught Ballmer’s attention. “We understand that you have been meeting to consider and assess your alternatives,” Ballmer wrote in the letter to Yahoo!’s board.

“This is despite the fact that our proposal is the only alternative put forward that offers your shareholders full and fair value for their shares, [and] gives every shareholder a vote on the future of the company.” peter.lauria@nypost.com