Microsoft Nixes New Yahoo Deal

SYDNEY (Reuters) – Microsoft Corp Chief Executive Steve Ballmer dismissed speculation the software giant might still be interested in buying Yahoo Inc, sending shares of the Internet company down 14 percent.

"We made an offer, we made another offer … We moved on," Ballmer told a business luncheon in Sydney on Friday, when asked for the company’s plans after a planned Web search advertising partnership between Yahoo and Google Inc fell through this week.

"We tried at one point to do a partnership around search … and that didn’t work either, and we moved on and they moved on. We are not interested in going back and re-looking at an acquisition. I don’t know why they would be either, frankly," Ballmer said.

He added that he thought there were still opportunities for some kind of partnership around search.

Ballmer’s comments came two days after Yahoo CEO Jerry Yang told an Internet conference in San Francisco that he believed a deal with Yahoo was still the best option for Microsoft. Both companies lag Google in the Web search market.

Shares of Yahoo surged earlier this week on speculation that it and Microsoft were in advanced talks, after Google pulled out of the search ad deal with Yahoo. Yahoo officials later said the rumors were untrue.

Microsoft abandoned an unsolicited $47.5 billion takeover bid for Yahoo in May, after the Internet company had rejected its $33-per-share offer as too low.

In June, Google and Yahoo announced their planned search ad partnership, which Yahoo had struck as a way of fending off Microsoft.

The two delayed implementation to allow the U.S. Justice Department to review the deal, but Google this week withdrew from the pact rather than face a protracted legal fight after antitrust regulators had concerns.

Yahoo shares fell $2.05 to $11.91 in morning trading on the Nasdaq, while Microsoft shares were up 1.92 percent at $21.28.

(Additional reporting by Tiffany Wu in New York; Editing by Mark Bendeich and John Wallace)