All Things Digital

Much as Yahoo would like to believe otherwise, Microsoft’s not done with the company yet. Just as BoomTown suggested it might, Microsoft (MSFT) has circled back for another run at Yahoo (YHOO) and, if it’s successful, it will seize Yahoo’s search business and sell the rest of the company off for parts. The Wall Street Journal reports that Microsoft has approached Time Warner (TWX) and News Corp. (NWS) (owner of Dow Jones and this site) about joining it in a deal that would effectively lead to to the company’s breakup (see “Murdoch-Blocked?” and “MSFT/YHOO/AOL/ NWS/WTF?“). Seems Steve Ballmer is unwilling to abandon a deal that would more than triple Microsoft’s share of U.S. Web searches.

Yahoo, for its part, is said to be skeptical of a deal that would essentially dismember it, but people close to the company tell the Journal that Yahoo is still open to discussing any proposal from Microsoft. Perhaps even one that would see the software giant acquire Yahoo for $33 to $34 a share. After all, this is exactly the deal Yahoo proposed to Microsoft on May 17–two weeks after the company officially dropped its bid for Yahoo. That’s right, Yahoo CEO Jerry Yang and Co.–after insisting Microsoft’s offer “substantially undervalued” the company, tried to resuscitate a deal after Microsoft CEO Steve Ballmer scrapped the bid. From the Journal:

[On] May 17, two weeks after Microsoft officially dropped its pursuit of Yahoo … Yahoo CEO Jerry Yang, director Ron Burkle and chairman Mr. Bostock met with Microsoft’s Mr. Ballmer. Messrs. Bostock and Burkle told Mr. Ballmer they were prepared to sell Yahoo for $33 to $34 a share, the price range Microsoft had offered before talks broke down, according to people familiar with the meeting. That would have valued the deal at about $47 billion, or $6 billion less than Yahoo’s previous asking price of $37 a share.”

BoomTown was right, Facebook has scored itself a “golden geek.” TechCrunch claims that Netscape/Opsware/Ning founder Marc Andreessen will join Accel Partners’ Jim Breyer, Founders Fund’s Peter Thiel and, of course, founder Mark Zuckerberg on Facebook’s board of directors. Which makes perfect sense, really. After all, as BoomTown pointed out back in May, Andreessen is “the man who was Zuckerberg before Zuckerberg was cool.”

Microsoft’s unsolicited acquisition bid for Yahoo is apparently looking more attractive to the now-minor Internet major, especially since Carl Icahn has mounted a full-fledged fight for the nine seats now on Yahoo’s board.

Sources close to Yahoo (YHOO) say the company would likely agree to an acquisition if the price is right. Trouble is, Microsoft (MSFT) doesn’t seem to be interested in one anymore.

Or at least that’s the way it would like to be perceived. Speaking at an event in Moscow, Microsoft CEO Steve Ballmer once again feigned disinterest in an outright acquisition. “Yahoo was never the strategy we were pursuing, it was a way to accelerate our online advertising business,” he said. “We will spend money on some acquisitions. You can do a whole lot of things with $50 billion.”

You sure can. Like spend $47.5 billion of it on Yahoo, just as you planned to last month–even though, as BoomTown’s Kara Swisher reports, Chairman Bill Gates harbored little enthusiasm for buying Yahoo.

But that may happen yet. Some inside Microsoft say the software company would still like to acquire Yahoo, it just doesn’t want to pay the $37-a-share or so Yahoo CEO Jerry Yang and Co. are reportedly demanding. And it may not have to, if Icahn and other ornery Yahoo investors like Legg Mason Capital Management (LM) force Yahoo’s hand.

Good thing so rarely a correlation exists between a company’s public announcements and its corporate actions. Otherwise, it might be tough to parse Microsoft’s recent comments about future acquisitions in light of some rumors floating around Silicon Valley today.

While touring Japan this week, company Chairman Bill Gates told a news conference that Microsoft (MSFT) isn’t likely to pursue other deals following its withdrawal of its ill-starred takeover bid for Yahoo (YHOO). Said Gates, “Now at this point Microsoft is focused on its independent strategy.”

Windows Live General Manager Brian Hall echoed that sentiment at an analyst meeting yesterday: “We’ve withdrawn the offer and moved on, and now are focused on how we grow as fast as possible organically.”

Seems this whole Yahoo debacle has put Microsoft off acquisitions entirely. Or has it? As first reported by BoomTown’s Kara Swisher, Microsoft recently contacted Facebook to gauge the Internet company’s willingness to sell it the 98.4% of the company that it doesn’t yet own. No word on what Facebook’s reply was, although CEO Mark Zuckerberg has long said he’s not interested in selling the company. And even if he were, Facebook doesn’t exactly solve the problems that Yahoo would have. It’s hardly a viable source of online advertising …

Microsoft (MSFT) and Yahoo (YHOO) have apparently taken some of their merger negotiations out of the press and into the boardroom. The two companies are said to be in “last-ditch” negotiations to reach a friendly deal, despite threats from the software giant this week that it would launch a hostile proxy bid or walk away from the deal entirely.

DealBook, citing a person involved in the talks, says Microsoft has upped its offer by several dollars a share and refers to the fresh talks as an “enormous breakthrough.” That said, the person also cautions that talks could still be postponed or collapse entirely.

Oh, one last thing: a deal is still not imminent. My God, what a fascinating new development.

Anyway, it seems Microsoft’s sweetened offer isn’t yet sweet enough for Yahoo, which worries that the merged companies would be forced to divest their email and instant-messaging assets by antitrust regulators. “We need a lot of reason to do the deal, because it could be very bumpy once we agree,” a Yahoo insider told BoomTown. “How damaged would Yahoo be if it did not go through or if important pieces of Yahoo had to be separated from the company?”

Well, veteran Google employee Sheryl Sandberg found a good use for her “20% time”: interviewing for the COO spot at Facebook. In news first reported on All Things Digital by BoomTown’s Kara Swisher, she’ll join the social network later this month as chief operating officer.

Quite a coup for Facebook. As Google’s vice president of global online sales and operations, Sandberg managed the division that handles sales for about 99% of the company’s advertisers. Her absence at Google (GOOG) will almost certainly be felt as deeply as her presence at Facebook, which stands to benefit a great deal from her experience building Google’s online sales and operations organization. Said Facebook CEO Mark Zuckerberg, “She has just about the most relevant industry experience for Facebook, especially since we need to scale our operations and scale them globally.”

Interesting to see a Google veteran like Sandberg jump ship for Facebook. Especially after the departures of
Gideon Yu, now Facebook’s CFO, and Benjamin Ling, who heads up Facebook’s developer platform. Perhaps the search giant is beginning to suffer from the same sort of brain drain it brought to bear on the industry a few years back. Recall this 2005 quote from LinkedIn founder Reid Hoffman?

Google is doing more damage to innovation in the Valley right now than Microsoft ever did. It’s largely that they’re hiring up so many talented people, and the fact they’re working on so many different things. It’s harder for start-ups to do interesting stuff right now.”