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January 20, 2009

Microsoft and Yahoo Execs Start Agreeing?

By Jessica Kostek, TMCnet Channel Editor

Who knows what is going to happen in this round however, Steven A. Ballmer, Microsoft’s (News - Alert) chief executive, met in New York earlier this week with Roy J. Bostock, Yahoo’s chairman, according to a person briefed on the meeting.

Recenlty, Carol Bartz (News - Alert), Yahoo’s new chief executive, told employees she had had an informal conversation with Mr. Ballmer since she was selected by the board to lead Yahoo.
According to The New York Times, in recent weeks, Mr. Ballmer has said repeatedly that Microsoft remains interested in doing a deal with Yahoo involving its Web search and advertising business, and that he favored coming to an agreement sooner rather than later.
The appointment of Ms. Bartz has renewed speculation that Yahoo might be more willing to consider a deal to hand over its search business to Microsoft.
Ms. Bartz acknowledged that deciding whether a search deal made sense was one of the big strategic questions she faced, but she declined to give her opinion about it. During the employee meeting the next day, she said her “gut” suggested that it was not a good idea, but she added that she would spend time studying the matter.
News reports of her remarks caused Yahoo shares to drop more than 6 percent on Thursday. They fell another 2 cents Friday, to close at $11.59, according to The New York Times.
Word of a meeting between Mr. Ballmer and Mr. Bostock was first discussed by Valleywag, a Silicon Valley gossip blog.
Those close to the situation say, if any negotiations or discussions between the two companies are restarting, they are likely to be preliminary. Two people close to the companies said that currently no investment bankers were involved in any discussions.
Yahoo has also been in on-and-off discussions about a possible merger with the AOL (News - Alert) Internet unit of Time Warnerwhich that company has been trying to sell. The conversations are continuing, according to people close to the companies.

Jessica Kostek is a channel editor for TMCnet, covering VoIP, CRM, call center and wireless technologies. To read more of Jessica’s articles, please visit her columnist page.

Edited by Jessica Kostek

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