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'Microsoft makes fresh move to break up Yahoo!'

Microsoft makes a new bid for Yahoo! search business and seek partnership with at least two other media companies in a deal that would lead to Yahoo!'s breakup, says the Wall Street Journal (WSJ).
IANS | By HT Correspondent, New York
UPDATED ON JUL 02, 2008 09:23 PM IST

Microsoft is making a new bid for Yahoo! search business and has sought partnership with at least two other media companies in a deal that would lead to Yahoo!'s breakup, the Wall Street Journal (WSJ) said on Wednesday.

The software giant has held preliminary talks with Time Warner and Rupert Murdoch's News Corp, the business daily said quoting people familiar with the discussions.

In the past too Microsoft has discussed an arrangement under which it would acquire Yahoo!'s search business and another partner would take over the rest of the internet company.

Microsoft chief executive Steve Ballmer called Yahoo! chairman Roy Bostock a week ago to suggest a meeting to discuss a new idea involving other partners, but the meeting scheduled for Monday was subsequently cancelled by Microsoft, which Yahoo! took as a sign that Ballmer's efforts to find a partner have so far failed, WSJ said.

It has also now emerged that Yahoo! was ready to sell itself to Microsoft for $33 a share in mid-May but was rebuffed, because Microsoft is now not interested in acquiring all of Yahoo!

But Microsoft has not given up on acquiring Yahoo!'s search business to gain the asset it needs to take on Google.

Yahoo!, which had rejected the initial $47.5 billion takeover offer by Microsoft as being too low, earlier this week questioned whether the software maker was ever serious about a full-scale merger. However, Yahoo! remains open to discussing any proposal from Microsoft, the paper said.

Microsoft is also encouraging Yahoo! investor Carl Icahn in his bid to run a slate of directors to replace Yahoo!'s board. Icahn, who has called for the removal of company's chief executive Jerry Yang in the run up to the annual shareholder meeting scheduled for Aug 1, has been pressing Yahoo! to still offer to sell itself to Microsoft in a deal that would lift its share price, WSJ said.

Meanwhile, Microsoft Tuesday agreed to acquire Powerset, a start-up company developing a new class of web search that relies on insights from linguistics rather than simple keyword strings.

Powerset's technology breaks down the meaning of words into related concepts, so users don't have to type the exact words they want to find. This approach, known as semantic search, has fascinated researchers for decades but proved frustratingly difficult to commercialise so far.

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