It is shaping up to be another rough day for Yahoo shareholders, now that we have confirmation that all discussions with Microsoft have come to an end with no deal of any kind being forged.
Yahoo just issued a press release saying that talkswith Microsoft have concluded following a meeting June 8 between Yahoo chairman Roy Bostock and some of the company's directors -- not including Jerry Yang, and Microsoft's CEO Steve Ballmer and some of his company's independent directors. At that meeting, a source close to Yahoo tells me, Yahoo was prepared to accept the $33 a share offer Microsoft had ultimately offered to acquire the entire company.
Microsoft informed Yahoo that it was no longer interested in acquiring the entire company at that price, and preferred to enter into a kind of "hybrid partnership" where Microsoft would buy Yahoo's search business. Yahoo didn't want to part with its search advertising business since selling it would go against the company's "vision of convergence" between display advertising and search advertising. The two sides agreed to disagree, and pushed back from the table with no deal of any kind.
"Our odyssey with Microsoft is over," this source tells me.
At the same time, some blog reports and the Wall Street Journal both reported that a deal with Google to "partner" on search advertising was imminent, and that an announcement could come as soon as after the market closes later today. This source tells me that while discussions with Google are advanced and ongoing, a deal may not necessarily be imminent.
Meantime, with Yahoo apparently entering into a deal with Google, it just goes to show the lengths to which the company was willing to go to get out from under a deal with Microsoft. That's because when word came out that Yahoo and Google were entering into a trial partnership to see how such a search advertising deal "could" work, it immediately raised concerns among United States Department of Justice anti-trust investigators. Despite that, and despite the sure thing of a 72 percent premium on the table from Microsoft before those original talks broke down, Yahoo appears still willing to take a significant gamble on something that falls far short of a sure thing.