Is Microsoft Eyeing Yahoo?

Microsoft and Yahoo logos with binary code and hand holding cash - money AP / CBS

Microsoft Corp. is resuming its pursuit of search engine operator Yahoo Inc. that could help it better compete with Web search leader Google Inc., published reports said Friday.

Yahoo shares surged more than 17 percent in premarket trading.

The New York Post reported Friday that Microsoft has asked Yahoo to enter formal negotiations for an acquisition that could be worth $50 billion. Yahoo's market capitalization was about $38 billion on Thursday.

The Wall Street Journal said executives of the two companies are looking at a merger or some other kind of matchup and said the talks appear to be early-stage discussions. It said the companies explored the idea of combining last year but the talks led nowhere.


"They're getting tired of being left at the altar," one source who has recently had talks with Microsoft told the Post. "They now seem more willing to extend themselves via a transaction to get into the game."

Microsoft is feeling increasing pressure to compete with Google, which plans to beef up its portfolio with a $3.1 billion purchase of online advertising company DoubleClick Inc.

Microsoft currently trails both Yahoo and Google in the lucrative and growing business of Web search.

Google won a search advertising deal with AOL in 2005 that the Post said Microsoft wanted. In addition, Google is developing Web-based software that directly competes with Microsoft Office.

The Post story said Microsoft and Yahoo have held informal talks over the years and said Microsoft's latest approach to Yahoo signals increased urgency.

Earlier this week, Yahoo said it would buy 80 percent of advertising exchange Right Media for $680 million, increasing its stake in that company to full control.

Yahoo shares surged $5, or 17.7 percent, to $33.18 in premarket trading, while shares of Microsoft fell 28 cents to $30.69.
  • Sean Alfano

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