The $31-a-share bid of cash or Microsoft stock is 62 percent more than Yahoo's closing price yesterday. Yahoo, which posted a 23 percent drop in fourth-quarter profit this week, had fallen 18 percent in Nasdaq Stock Market trading this year before today. Microsoft fell the most since 2006 as investors expressed disapproval of the deal.
Microsoft Chief Executive Officer Steve Ballmer is attempting the biggest-ever technology takeover after failing to compete with Google in a market that may almost double to $80 billion by 2010. Microsoft's shares have dropped more than 40 percent since Ballmer took over from co-founder Bill Gates in 2000.
Yahoo's inability to crack Google's dominance in search has led to eight straight quarters of declining profit and a stock that, before today, had lost half its value in the past two years.
Scope of Purchase
The purchase would be the largest acquisition ever in the technology industry. There have been bigger media and telecommunications deals. America Online Inc. in 2001 bought Time Warner Inc. for $124 billion to create the largest Internet and media company. In 2000, Vodafone Plc of the U.K. paid $175 billion for Mannesmann AG, Germany's biggest mobile-phone company.
Microsoft's acquisition pace picked up after Google agreed to buy DoubleClick Inc., an AQuantive rival, for $3.1 billion. Microsoft opposed the DoubleClick acquisition, claiming it would give Google too much control over the online ad market. The deal is under review by European regulators.
Microsoft's bid to challenge Google in online ads results from slowing growth in the computer software market. Microsoft also faces challenges in that business from Google, which now offers applications for word processing, spreadsheets and presentations over the Web.
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