Look, we made an offer, we made another offer. It was clear that Yahoo didn't want to sell the business to us, and we moved on.
We are not interested in going back and relooking at an acquisition...I don't know why they would be either, frankly.
Investors apparently were holding out hope deal talks would be reignited, after Yahoo CEO Jerry Yang on Wednesday said at the Web 2.0 conference that Yahoo was willing to sell the company to Microsoft:
To this day, I have to say that the best thing for Microsoft to do is to buy Yahoo. I don't think that is a bad idea at all...at the right price, whatever the price is, we are willing to sell the company.
We were ready to negotiate, we wanted to negotiate a deal, and we felt that we weren't that far apart. But at the end of the day, they withdrew and they since have been very clear about not wanting to buy the company.
But Sandeep Aggarwal, an analyst for Collins Stewart, noted in a research report Friday that the market is overreacting to Ballmer's comments:
We do not view Ballmer's comments about no interest in (a Yahoo) acquisition as an incremental data point. What is more important and incremental is that CEO Ballmer's comments are providing clear endorsement that (Microsoft) is still very interested in a search only deal (a clear positive for Yahoo). Since Microsoft walked away from YHOO on June 12, we have been consistently highlighting that Microsoft will very likely come back but for a search only deal and we stand by our thesis. Investors do not have to see a full YHOO acquisition right now to realize full and fair value for YHOO and a search only deal by Microsoft can provide material upside to the shares of YHOO. We believe that MSFT's search proposal can give $8 to $10 per share lift to Yahoo even based on very simple and achievable economics.
We will take today's weakness in the shares of YHOO as an opportunity to get into YHOO as Yahoo offers material option value for its search business, especially now that we all know that MSFT continues to be very interested in that business.
We expect to see a search-only deal proposal from Microsoft. This proposal may not be as lucrative as the one we saw on May 29, but it can still give $8 to $10 per share lift to YHOO. We believe that a new proposal from MSFT is a very near-term event.
We would highlight four reasons (for Yahoo to accept a search-only deal from Microsoft) 1) No material upside to the shares of YHOO on fundamental basis but a possible search deal with MSFT can easily give $8 to $10 per share lift, 2) Google continues to make YHOO less relevant in search and it is better to get a premium for the search business now from MSFT before it is too late, 3) Core search is emerging as a duopoly and companies that are willing to invest billions in Cap-Ex and deploy thousands of engineers will emerge as the top providers and YHOO has not made and cannot make that level of investments, and 4) a shift of focus from search to the rest of the businesses can help YHOO's management to provide investors a material upside in valuation in the next two to three years with laser focus and unparallel execution.
Yahoo investors have been on a wild ride this year, with every comment from Ballmer and Yang sending the stock on roller-coaster ups and downs.
Yang's comments regarding Microsoft on Wednesday sent Yahoo's shares up as much as 11 percent to $14.84 a share, despite the duel announcement that the Google deal was over.