St. Petersburg Times
Business
Special report
Video report
  • For their own good
    Fifty years ago, they were screwed-up kids sent to the Florida School for Boys to be straightened out. But now they are screwed-up men, scarred by the whippings they endured. Read the story and see a video and portrait gallery.
  • More video reports
Multimedia report
Print Email this storyEmail story Comment Letter to the editor
Fill out this form to email this article to a friend
Your name Your email
Friend's name Friend's email
Your message
 

Microsoft, Yahoo merger looks dead

By ASSOCIATED PRESS
Published May 5, 2007


ADVERTISEMENT

NEW YORK - Speculation about a possible Microsoft-Yahoo tieup met with skepticism Friday from analysts as reports began to surface that the deal was already dead.

The reported takeover talks that sent shares of Yahoo Inc. up by 10 percent Friday were no longer taking place, the Wall Street Journal said in an online article, citing sources familiar with the negotiations.

Yahoo Inc. shares surged following published reports Friday that Microsoft Corp. had resumed its pursuit of Yahoo to better compete with Web search and advertising leader Google Inc.

Both companies declined comment on the reports.

David Hallerman, a senior analyst at the research group eMarketer, said he saw many cultural problems and few strategic benefits with a Microsoft-Yahoo combination.

"There's too much overlap between Microsoft and Yahoo, and to try to merge the company cultures of two large companies like that in general is hard, " Hallerman said.

Industry analyst Matt Rosoff with Directions on Microsoft in Kirkland, Wash., said the huge takeover was unlikely, noting that Yahoo would duplicate services Microsoft's MSN already provides, such as instant messaging and e-mail.

It is possible, Rosoff added, that Microsoft and Yahoo might pursue a deal involving only online search advertising. Hallerman said he could see, at most, a spinoff of Microsoft's MSN online division to be run by Yahoo.

Microsoft clearly needs to make some kind of bold move because it remains a distant third in the lucrative online search market despite investing heavily in an attempt to gain ground on Google and Yahoo, said Ryan Jacob, who runs an Internet fund specializing in Internet stocks.

To make matters worse for Microsoft, the personal computer software empire that accounts for most of its profits is being increasingly threatened by so-called "open source" alternatives as well as free online programs being offered by Google and others.

Yahoo also has reached a critical juncture after sputtering through much of 2006 while Google's search engine continued to fire on all cylinders.

A combined Microsoft-Yahoo still wouldn't be as large as Google.

In March, Google commanded a 48 percent share of the U.S. search market, trailed by Yahoo at 27.5 percent and Microsoft at 11 percent, according to the latest data from comScore Media Metrix.

[Last modified May 5, 2007, 00:59:42]


Share your thoughts on this story

[an error occurred while processing this directive]
Subscribe to the Times
Click here for daily delivery
of the St. Petersburg Times.

Email Newsletters

ADVERTISEMENT