Ballmer's in a bind

The Microsoft chief executive tells The Wall Street Journal that the deal only makes sense at a certain price, even though he concedes there aren't many alternatives if Microsoft wants to gain scale.

Even by his own words, Steve Ballmer is in a bind.

The Microsoft chief executive told employees that he has a figure in mind as to what Yahoo is worth, but doesn't plan to pay "a dime above" that amount, according to The Wall Street Journal. At the same time, he concedes that there aren't a whole lot of other options for the software maker to add scale in its battle against Google.

"Look at all the properties on the Internet--everything on the Internet," Ballmer told the Journal in an article published Thursday afternoon. "There's really only five or six that really have any scale. Worldwide, you'd maybe get seven or eight."

Among those Ballmer named were Facebook, MySpace, AOL, and Yahoo, giving a sense of who might be part of Microsoft's "plan B" should it be forced to go that route.

Hence his dilemma. Ballmer doesn't want to overpay. But as much as Yahoo hasn't been able to line up a better alternative to Microsoft's offer, he has not been able to come up with another alternative that would enhance Microsoft's online advertising business the way Yahoo would.

"We like our strategy," Ballmer told the Journal. "We don't like our position. I'd like to have a better position relative to the guy who sells the most advertising."

The question remains just what price Ballmer is willing to pay for that and what means Microsoft will have to go to in order to get that offer to be considered. Microsoft had given Yahoo until last Saturday to come to the negotiating table, although that deadline--and four more days--have now come and gone.

Ballmer told employees on Thursday that he has a price in mind, according to Silicon Alley Insider, which reported details of the employee meeting earlier on Thursday. The site quoted Ballmer as saying a decision on Yahoo was expected in short order, although Ballmer's comments to the Journal seem to indicate Microsoft is still testing the waters.

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