Report: Microsoft board meets over Yahoo bid, but doesn't decide next step

IDG News Service - Microsoft Corp.'s board of directors met today to discuss how to proceed on the company's bid to acquire Yahoo Inc., but it didn't reach any final decisions, The Wall Street Journal reported.

Quoting anonymous sources, the Journal reported that an announcement by Microsoft is now expected later this week. A spokeswoman for the software vendor said that it doesn't comment on board meetings as a matter of corporate policy.

All of the parties with a stake in the proposed deal have been waiting for Microsoft's next move since Yahoo didn't agree to a deal by last Saturday, the deadline that Microsoft had set three weeks earlier.

Many observers had expected a reaction from Microsoft first thing Monday morning. With its silence continuing into this afternoon, Henry Blodget, CEO and editor in chief of the "Silicon Alley Insider" business news Web site, speculated in a post today that Microsoft leaked the information about its board's latest deliberations in an effort to help push Yahoo toward an agreement.

"This leak is obviously a calculated attempt to dangle another few dollars in front of Yahoo shareholders in hopes that they will put pressure on Yahoo to strike a deal," Blodget wrote. "We suspect [Microsoft CEO Steve] Ballmer and the board may now wait and see what impact this leak has before making their final decision." Blodget's online bio notes that he owns shares and/or stock options in both Microsoft and Yahoo, among other companies.

The Journal reported today that Ballmer has been personally lobbying major Yahoo shareholders this week in hopes that they, in turn, would pressure Yahoo's board to accept the unsolicited acquisition bid. Yahoo rejected the proposal in February, saying that Microsoft's cash-and-stock offer — initially valued at $44.6 billion — wasn't a fair price.

When Ballmer set the Saturday deadline for Yahoo to come to terms with Microsoft, he threatened that the software vendor might launch a proxy fight for control of Yahoo's board. He also warned that Microsoft might lower its offer for the Internet services company if it had to resort to a proxy fight. But both Ballmer and Chris Liddell, Microsoft's chief financial officer, softened that stance in public comments last week, saying that giving up on the acquisition would also be an option.

According to the Journal, Microsoft is willing to increase its offer from $31 per share to $33, but not to the $35-to-$37 range wanted by Yahoo's management and board members as well as some of its stockholders. Yahoo's stock price stood at $27.41 when the stock market closed today.

In the meantime, Yahoo and Time Warner Inc. have continued to explore the possibility of Yahoo merging with the latter's AOL LLC subsidiary in exchange for Time Warner getting a 20% stake in Yahoo, the Journal reported.

Nancy Gohring of the IDG News Service contributed to this story.

Reprinted with permission from

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