MoneyWatch Tech

Microhoo: The Logjam May Be Breaking, but Yahoo Holding Out

By Larry Dignan

Updated on: April 30, 2008 / 6:34 PM EDT / MoneyWatch

Microsoft's board is meeting Wednesday to mull over its next move regarding its Yahoo board.

The Wall Street Journal, which has been tipped off, cites "people familiar with the matter," also known as Microsoft, and reports that an announcement could come after this board meeting.

Microsoft's board is voting on the Yahoo game plan now.

Here's a look at the scenarios:

Microsoft is willing to go to $32 to $33 a share for Yahoo. However, Yahoo wants $35 to $37 a share. I agree with Microsoft CFO Christopher Liddell here: Yahoo is unrealistic.
Microsoft appears to be pressuring Yahoo shareholders to lean on the portal's board.
Add it up and Microsoft could walk awayâ€"at least initially. The fact that Microsoft is entertaining a higher bid means that the software giant really doesn't want a proxy war. However, just the fact Microsoft is willing to raise its offer may woo Yahoo shareholders to its side.

The big question is whether Yahoo will do a deal with Time Warner for AOL, which has a lot of traffic but no ad revenue growth.

In any case, it appears to be Microsoft CEO Steve Ballmer's call whether to pursue Yahoo, walk away or pony up more cash.

Larry Dignan is Editor in Chief of ZDNet and Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations. Credit: ZDNet.