Tag Archives: competitors

Yahoo Rejects Microsoft Bid

Earlier this week Microsoft made a public bid to purchase Yahoo, now Yahoo (NSDQ: YHOO ) shareholders have filed suit – objecting to Yahoo's rejection of the $44.6 billion bid. The first lawsuit filed has been on behalf of the Wayne County Employee's Retirement System of Michigan, owner of approximately 13,600 shares.

Yahoo's rejection of Microsoft's (NSDQ: MSFT ) offer, using language that indicated an encouragement of higher offers from the software giant, is little more than a play for a better deal. That, coupled with Yahoo being seen in talks with News Corp on Wednesday, has lead some analysts to believe Yahoo is on the auction block.

This entire deal can be viewed as a power-play to create a Google Adsense competitor in the online advertising market. However, both Yahoo and Microsoft are competitors in the search engine market, and their services overlap in several other smaller areas. Microsoft is still reeling from their much-anticipated but largely disappointing release of the newest version of their Windows operating system, Vista, with some believing nothing short of a full-scale recall is imminent. Likewise, Yahoo reported a drop in profits 23% last quarter, and has been acquiring "Web 2.0" companies that are seen as having no readily apparent revenue generating business models. Flickr alone, the search giants online photo hosting service, is said to cost the company $1m monthly in bandwidth.

Yahoo, appearing desperate to avoid a takeover, is said to have reached out to its chief competitor Google in hopes of forming an alliance to withstand the takeover bid from Microsoft. Google has issued no public statement, but insiders have said the company has no interest in any sort of partnership, fearing such actions would attract antitrust attention in the U.S. and EU.