Microsoft feels it has made Yahoo an offer it can't refuse

Yahoo's board and executives rejected Microsoft's buyout offer, and have tried to fight off Microsoft's hostile takeover bid.  They tried to partner with competitor Google, but were met with apathy.  Yahoo then decided to buy video advertising and content provider Maven to try to strengthen its advertising revenue.  It even launched a new homepage customization service that was relatively well received.

Still, reality appears to be about to catch up to Yahoo, as analysts predict that it will post another disappointing quarter, likely leading shareholders to approve of a buyout.  Alternatives, such as a Yahoo buyout of AOL seem unlikely, particularly as AOL is conducting its own campaign of perhaps futile acquisitions.  Matt Rosoff, an analyst at independent research firm Directions, says Microsoft appears ready to stay the course, stating, "I don't think they have any intention of backing away."

Yahoo previously considered being acquired by Rupert Murdoch, owner of Myspace and its parent company News Corp.  Murdoch, however, stated that there was no possibility such a deal would occur, stating that News Corp. was "not going to get into a fight with Microsoft."

Yahoo tried to push back the date for nominating directors, as it fears Microsoft will be able to push in directors in favor of the acquisition.  Jeffrey Lindsay, a Sanford C. Bernstein & Co. analyst, states, "In short we think Yahoo has bought itself another month or so, but at this juncture do not see any reasonably viable alternatives other than the remote possibility of Google re-entering the fray."

Some fear that Microsoft may withdraw and lower its bid as Yahoo struggles further.  In a move that perhaps signals Yahoo coming to grips with its inevitable fate, Yahoo Inc. and Microsoft Corp. executives met, so that Microsoft could present its vision for the partnership.  The meeting was considered a major breakthrough as Yahoo's executives had been relatively silent to Microsoft since their rejection of the offer last month.  According to inside sources, Yahoo executives mostly listened to what Microsoft had to say.

It was unannounced whether Yahoo Chief Executive Officer Jerry Yang and Microsoft CEO Steve Ballmer participated in the meeting.  Ballmer has been a vocal advocate of the merger, most recently plugging it at MIX08.  Microsoft has maintained a friendly attitude with Yahoo, stating that it has plenty of jobs for Yahoo employees at a time when Yahoo may otherwise be looking to lay off more employees.

Microsoft's stock price has fallen since the deal was first broached, dropping its value from $44.6B USD to $41.9B USD. 

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