Yahoo's Fate (Almost) Sealed As Microsoft's Ballmer Says No To Acquisition

Microsoft CEO Steve Ballmer said at the company's annual shareholder meeting that the company was no longer interested in purchasing Yahoo, at least for now.

Responding to a question from the audience, Ballmer declared that, "We are done with all acquisition discussions with Yahoo. I've said that a bunch of times. Somehow some people have gotten confused nonetheless, We did our best. We thought we had something that made sense. It didn't make sense to them. We've moved on."

However, Ballmer did not discard the idea of collaborating with Yahoo on search although Microsoft supremo appears more inclined to adopt a wait-and-see attitude.

Yahoo's stock fell sharply on the news with the shares hovering dangerously close to $9, down by 21 percent, something which hadn't been seen for nearly six years.

This put the value of the company at less than $13 billion, less than a quarter of what Microsoft offered back in February 2008 (the firm offered an improved bid of $33 per share in May 2008).

The US market which is dominated by Google is expected to grow by 25 percent this year alone and the current economic turmoil means that more companies might flock online in a bid to improve their efficiency and get a sensible ROI (return on investment).

So what's next for Yahoo? The company has already announced that it will lay off an additional 1500 employees next January. The company's operating income for the last quarter was only $54 million, that's a tenth of that of the quarter (ending 2008-03-31) during which Microsoft made that fateful bid.

The world is set to go through a prolonged recession, which means that Yahoo's shares could possibly even tumble further and this is possibly why Microsoft (and other potential suitors) are holding back their cards.

After all, why pay full price when, given the right circumstances, Yahoo's price could go a bit further down. Patience is a virtue when it comes to buying during economic doldrums.

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