Microsoft Bids for Yahoo in Effort to Gain on Google Microsoft has made a $44.6 billion bid for Yahoo, an aggressive move by the software giant to gain market share on the Internet and compete with Google. Microsoft and Yahoo have talked about merging for years. This time, a hostile but very rich offer could seal the deal.
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NPR's Wendy Kaufman reports on 'All Things Considered'

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Microsoft Bids for Yahoo in Effort to Gain on Google

NPR's Wendy Kaufman reports on 'All Things Considered'

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  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.


I'm Robert Siegel.

And for Microsoft, here's the problem. If you wanted to find out some of the details of its unsolicited takeover bid for Yahoo!, chances are you'll go to Google to search for them. But we'll save you the trouble. The price tag - a whopping $44.6 billion. That's $31 a share. A big premium. Coming up, we'll hear about the Internet advertising market, a big force driving this possible deal.

But first, NPR's Wendy Kaufman tells us about how the offer came about.

WENDY KAUFMAN: Over the past couple of years, Microsoft and Yahoo! have held talks about the possibility of joining together. And while the talks were originally constructive, Yahoo! ultimately said no deal. As Yahoo!'s stock continued to fall, Microsoft began contemplating a hostile bid. Perhaps, that was the surprise that Microsoft's chairman was alluding to during an interview this week with CNBC. When Bill Gates was asked about Microsoft's toughest competitor, he named Google.

Mr. BILL GATES (Co-founder, Microsoft): I think a lot of people that highlight them as one of the - maybe the most interesting competitor we have. We don't overlap with them as much as some other companies. But as time goes on, as we're doing more, we're going to challenge them and search and surprise them. So…

KAUFMAN: A source close to Microsoft says that since Yahoo! had effectively cut off merger talks, Microsoft decided to put what it considered a very attractive offer on the table and leave it up to Yahoo! share holders. They would get a 62 percent premium over the current stock price. But first, Microsoft CEO Steve Ballmer placed a courtesy call to Yahoo!'s chief executive. Ballmer described it during a conference call.

Mr. STEVE BALLMER (CEO, Microsoft): Last night, I called Jerry Yang to discuss our proposal. This is a proposal we believe to be a very good deal for Yahoo! share holders and an offer we want them to think about, seriously, to be excited about and particularly, to have the Yahoo! employees be very, very excited about.

Mr. MATT McDANIEL(ph) (Yahoo! Employee): It could be great. Who's to say? It's really - it's too early to tell right now.

KAUFMAN: That's 32-year-old Matt McDaniel, who works for Yahoo! in Santa Monica, California. Like lots of analysts, he believes his company has real strengths.

Mr. McDANIEL: You know, Yahoo! does what it does very well, and that they want to buy us out, it means that they recognize that themselves.

KAUFMAN: Together, Yahoo! and Microsoft would have about 30 percent of the Internet search market. That's about half what Google has now. But beyond search, Yahoo! has the most visited set of Web sites anywhere on the Web. And Matt Rosoff, an analyst with the independent research firm Directions on Microsoft says, that means more advertising dollars.

Mr. MATT ROSOFF (Analyst, Directions on Microsoft): More people visit Yahoo! than any other Web site. And so therefore, advertisers would want to buy advertisements on Yahoo! more than they want to buy advertisements anywhere else. It's like comparing the Super Bowl with some obscure show on cable TV. The Super Bowl gets the most viewers. Advertisers are willing to pay the most to advertise on a Super Bowl.

KAUFMAN: But Rosoff goes on to say that for Microsoft, it's about more than just the ad revenue itself. As Google has continued to grow and rack up enormous profits, it has begun to offer things like word-processing and spreadsheets over the Web for free. If you use those, you don't have to buy Microsoft software. Yahoo! undoubtedly taken aback by the boldness of Microsoft's bid, said in a statement that its board would evaluate the proposal carefully and promptly. Even if Yahoo! agreed to the takeover, the deal would still face scrutiny by U.S. and European regulators.

Wendy Kaufman, NPR News, Seattle.

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