Undaunted by Yahoo!’s solid earnings report, Microsoft CEO Steve Ballmer continued his overseas blustering tour yesterday by telling an Italian audience that his company is perfectly content to walk away from a deal.
Meanwhile across the Atlantic, the US Department of Justice is looking into whether Yahoo!’s test outsourcing deal with Google violates antitrust regulations.
The dual developments came one day after Yahoo! reported decent but not overly impressive first-quarter earnings and on the eve of what is expected to be a strong fiscal third-quarter earnings report from Microsoft today.
In stark contrast to Yahoo! CEO Jerry Yang’s more reserved demeanor, Ballmer’s rhetoric continues to be emotional.
“We are offering a lot of money,” Ballmer said at a conference in Milan, Italy, of his company’s bid for Yahoo!. “If Yahoo!’s shareholders like it, that’s great. We are prepared to go forward without a merger.”
Microsoft originally offered $31 per share for Yahoo!, or about $44 billion, in a mix of cash and stock. The per-share value has decreased since then and currently stands at $30.45 because of a drop in Microsoft’s stock price.
Of course, no one believes that Ballmer is actually prepared to “go forward without a merger,” particularly since he has repeatedly stated publicly that buying Yahoo! is the surest way to achieve Microsoft’s goal of 30 percent market share in search advertising.
Sources said that Ballmer is more likely to reach out to Yahoo! through back channels with a slightly sweetened offer provided Yang and the board agree to begin formal deal discussions. Barring that, and absent a deal by Microsoft’s self-imposed Saturday deadline to go hostile, Ballmer will likely move forward with his plan to unseat Yahoo!’s directors.
Even before news of the DOJ’s concerns broke, sources said Yahoo! was unlikely to announce a deal to fully outsource its search advertising to Google.
Such a deal would raise antitrust issues since Google would control roughly 80 percent of the market.
Shareholders who have analyzed it say that Yahoo! could realize an upfront cash payment of between $1.5 billion and $2 billion if the limited test expands to include 95 percent of Yahoo!’s paid search ads.
“Yahoo! proactively kept the Department of Justice informed of its intention to conduct this limited test with Google and has provided information to the DoJ.,” said a company spokesman.