CeBIT: Microsoft still wants Yahoo

Microsoft CEO Steve Ballmer has expressed hopes that the company will still acquire search engine Yahoo. But, speaking at this week's CeBIT, he would not say whether it would pursue a proxy fight to remove Yahoo's board.

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Microsoft CEO Steve Ballmer has expressed hopes that the company will still acquire search engine Yahoo. But, speaking at this week's CeBIT, he would not say whether it would pursue a proxy fight to remove Yahoo's board.

Ballmer confirmed "a range of dialogue" and that there were "alternatives" under discussion with Yahoo. However, he also stressed it was important for him "not to get into the detail".

Yahoo's executives have spurned Microsoft's initial $44.6 billion (£22 billion) cash-and-stock offer, which has raised the question of whether Microsoft will pursue a hostile takeover. The worth of Microsoft's offer has declined by several billion dollars as the company's share price has dropped over the past few weeks.

"We still think the deal makes sense," said Ballmer who gave a keynote speech at CeBIT. "We hope over time that becomes a reality."

Microsoft hopes that a deal will bring it the engineering resources and web savvy that has made Yahoo one of the most recognisable web brands and eventually allow Microsoft to better compete in the online advertising market with Google.

Yahoo has also been struggling against Google and been plagued by mediocre financial results in addition to turmoil in its management ranks. However, CEO Jerry Yang has told employees not to be distracted by the bid and to stay focused.

Ballmer, whose company presented the unsolicited offer for Yahoo on February 1, said the bid has merit for the companies' shareholders, advertisers, publishers and consumers.

He said Microsoft remains "fully engaged" with Yahoo and maintained the two companies together have the potential to create a lot of value.

"Ultimately, Yahoo's management's going to have a perspective on that, Yahoo's board will have a perspective on that and Yahoo's shareholders," Ballmer said. "We are trying to have appropriate levels of engagement with all three of those constituencies, as well as with other industry participants."