Microsoft and Yahoo dismiss report of search deal

Microsoft and Yahoo have dismissed a report that they’re once again in discussions to sell Yahoo’s online search business for US$20 billion.

The Sunday Times wrote Microsoft had agreed to the “broad terms of a deal” but there was no guarantee that it would be completed.

“We continue to offer no comment on such rumors and speculation,” according to a statement supplied by one of Microsoft’s public relations agencies, Waggener Edstrom, in London on Monday.

A Yahoo spokeswoman also said the company had no comment on the report.

The Sunday Times wrote that Microsoft would bring in Jonathan Miller, the former CEO of AOL, and Ross Levinsohn, a former president of Fox Interactive Media, to manage a new team.

The Times also wrote that Microsoft seeks a 10-year agreement with Yahoo to run Yahoo’s search business. Microsoft would have a two-year call option to buy that business for US$20 billion. Yahoo would still run its own e-mail, messaging and content services, the paper wrote.

Microsoft began courting Yahoo earlier this year, offering US$44.6 billion in February for the entire company, or around US$31 per share. Yahoo’s cofounder and then-CEO Jerry Yang held out for a higher offer, but Microsoft eventually lost interest.

Yahoo’s stock has since quickly fallen along with the stock of many other technology companies that are feeling the effects of the global credit crunch. Yahoo’s stock closed on Friday at US$11.28 per share, putting its total market capitalization at US$15.96 billion.

Yang stepped down as CEO last week after taking over in June 2007. The company has been under increasing pressure from investors such as Carl Icahn, who is one of Yahoo’s directors, to either make a deal or change the company’s management.

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Jim Love, Chief Content Officer, IT World Canada

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