Yahoo Snubs Microsoft Again–And This Time They Mean It!

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Whats that they say about being once bitten, twice shy? Well, it seems the folks over at Microsoft must have thicker skin than the rest of us as the Microsoft and billionaire investor Carl Icahn’s joint proposal for Yahoo was rejected on Saturday, also included improved revenue guarantees from search advertising.

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According to Reuters, the improved terms included $US 2.3 billion in guaranteed annual revenue from search advertising for five years, with the option to extend the deal for another five and would also have carried a minimum annual payment of $US1.6 billion for the subsequent five years.

But on Saturday Yahoo rejected the joint proposal, which would have given Microsoft its search business and left Icahn, who owns nearly 5 percent of Yahoo, in charge of the remaining company, according to the report.

As part of its revised proposal, Microsoft also reiterated its suggestion that Yahoo sell its Asian assets, but Yahoo’s board and advisers felt this was something the company could do independently, according to Reuters.

So after withdrawing its $US47.5 billion full buyout offer, Microsoft said in June it had offered Yahoo “$US9 billion in cash for a partial deal, as well as revenue guarantees on search advertising”, that would have brought Yahoo $1 billion a year in operating income.

Analysts not that such an exclusive deal would have effectively “outsourced to Microsoft all the advertising that Yahoo runs alongside its search results using its in-house Panama ad system”.

But Yahoo, in a classic case of having your cake and eating it, instead chose to sign a non-exclusive search ad deal with Google, which promises $US 800 million a year in revenue and leaves Yahoo free to seek similar advertising partnerships with other companies.

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