Microsoft Has Its Eyes on Yahoo

October 07 00:00 2011

New York, October 7 ( – After its unsuccessful endeavor in 2008 to take over Yahoo (NASDAQ: YHOO), Microsoft (NASDAQ: MSFT) is again in the race along with a host of other companies that are eyeing the internet company. The other contenders include buyout firms Providence Equity Partners, Hellman & Friedman and Silver Lake Partners, as well as Chinese e-commerce giant Alibaba and Russian technology investment firm DST Global, as revealed by sources close to the situation.

Yahoo has a market value of $20 billion and is preparing its financial pitch books for potential buyers. Its shares jumped to $15.92 on NASDAQ by rising 10.1 percent but they dropped back to $15.34 in after-hours trading. There was a rise of 2.2 percent in Microsoft shares and they ended at $25.89.

It is likely that Microsoft might look for a partner to bid for Yahoo but no decision has yet been taken. It is also likely that Microsoft might not bid because there are internal divisions at the software company on whether to go after Yahoo or not. One camp, which is for the deal, believes that taking over Yahoo would erase AOL Inc as a competitor and create a strong Web portal that can offer better products to audiences, advertisers and end users.

The other camp, which is against the deal, believes that it would be futile for Microsoft to invest billions of dollars in an acquisition that does not have the required growth potential. An executive of this camp said that “Yahoo’s value hasn’t grown in years, and some executives feel we should buy something that is more forward-looking.”