Yahoo's Decker in 'Ongoing' Talks With Microsoft

Yahoo trumpeted a series of new advertising deals on Wednesday in a bid to alleviate shareholder pressure, even as the company continues "engaged" discussions over a deal with Microsoft.

Sue Decker, Yahoo President

Yahoo President Susan Decker unveiled new advertising partnerships with Wal-Mart Stores, CBS, and others, while also saying the Internet company is in "ongoing, engaged talks" with Microsoft.

Decker's comments come as billionaire investor Carl Icahn said he would seek to remove Jerry Yang as Yahoo's chief executive if Icahn succeeds in a proxy battle against the company over its failure to reach a deal with Micosoft , according to media reports.

In an interview on CNBC's "Power Lunch," Decker said her comments are "pretty consistent" with what Microsoft CEO Steve Ballmer said last week.

Microsoft indicated that it's in discussions about various partnerships, but Decker declined to discuss the details of the current discussions with Microsoft.

Yahoo has come under criticism from some shareholders, including Icahn, for not taking more aggressive steps to negotiate a deal with Microsoft, which had offered Yahoo $47.5 billion.

According to Icahn, newly unsealed court documents tied to a shareholder lawsuit show how Yahoo had taken steps to rebuff a Microsoft's takeover bid months before the software maker made its offer public on Feb. 1.

“I don’t think anybody ever understood the magnitude of what Yahoo did to do avoid making a deal,” Mr. Icahn said in an interview with The New York Times.

However, Decker told Power Lunch that Microsoft walked away from the deal.

"There was a discussion about what value was achievable," Decker said, "and other terms that were never really discussed ... and we never got to those, because there was a disconnect between what the company is worth, from our board's perspective, and what Microsoft was willing to pay."

Decker said some form of deal with Microsoft could still come about, sending Yahoo shares up 2.7 percent for the day, despite Icahn's later blistering, personal attack on Chief Executive Jerry Yang's leadership at Yahoo.

In an invective-filled letter to Yahoo, Icahn used terms like "deceitful," "self-destructive," "misleading" and "insulting to shareholders" for moves by Yang and the board to retain employees in a severance plan likely to make a deal with Microsoft more costly.

He called on Yahoo to rescind anti-takeover defenses and merge with Microsoft, writing that "even I am amazed at the length Jerry Yang and the Yahoo board have gone to in order to entrench their positions and keep shareholders from deciding if they wished to sell to Microsoft."

Icahn has proposed an alternate board ahead of Yahoo's annual meeting on Aug. 1. He told CNBC later on Wednesday that "we have good odds" in the Yahoo proxy battle and said an alternate deal in which Microsoft would buy only parts of the company would not serve shareholders.

Wal-Mart's Eyeballs

The multiyear Wal-Mart deal makes Yahoo the primary ad sales channel for Walmart.com's display and video advertising. Yahoo will become the exclusive portal to resell the site's display inventory.

The agreement gives Yahoo a major participant for its new AMP ad management system, a linchpin of the company's strategy to reach outside its own base of users and increase its position as the "must buy" location for online advertisers.

AMP aims to simplify the process of buying and selling online ads for advertisers, ad agencies, fast-growing ad trading networks and Web site publishers.

Decker said the system, already in the works for months, should launch for its newspaper site partners in the third quarter.

In another deal, the digital unit of advertising holding company Havas will work with Yahoo globally on AMP. A third agreement calls for Yahoo to carry CBS content, like clips from TV shows, as part of a broader plan by the media company to add new outlets for its television programs.

The deal would have Yahoo join the CBS Audience Network, which already includes Google's YouTube, Time Warner's AOL and Microsoft's MSN, as well as sites like Joost, Veoh and Bebo.

Yahoo also said it reached agreements to expand its newspaper advertising consortium by 94 more properties, bringing the total number to 779. Among other things, Yahoo provides the technology to serve graphical display ads on the websites of the newspapers involved.

Yahoo has also been talking to Google about an advertising partnership in web search, although Decker declined to talk about any current negotiations on that front.

"We looked at that alternative," she said. "It did inform how the board responded to some of the past overtures" from Microsoft.

-Andrew Fisher, of CNBC.com, and Reuters contributed to this article.

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