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Microsoft-Yahoo! - Microsoft Threatens To Walk

Microsoft could walk away completely, a move that will send Yahoo! stock back to the teens

Time is running out on Microsoft’s deal-or-else ultimatum to Yahoo! Basically Yahoo! has to move off the dime by Saturday or else Microsoft could try taking the place by force, lowering its rejected $31-a-share bid in the process or – scarier still for Yahoo! – Microsoft could walk away completely, a move that will send Yahoo! stock back to the teens and could be the undoing of Yahoo!'s desperate CEO Jerry Yang.

Microsoft was unmoved by the slightly better-than-expected results Yahoo posted Tuesday – and Yang’s claim that the numbers prove Yahoo is worth more – to offer more money. It said it would stick by its price.

“We know what Yahoo!’s worth; $44 billion is a lot of money,” Microsoft CEO Steve Ballmer (pictured) said at a conference in Milan on Wednesday.

He also said that Microsoft “is prepared to move forward alone without Yahoo!.”

“Time is money,” he said later. “We made [that] clear in the last letter we sent,” meaning his ultimatum.

Analysts think Ballmer is merely posturing. They also tend to think that Yahoo! is unlikely to get much of a sweetener out of Redmond, maybe a dollar or two a share.

In its ultimatum three weeks ago, Ballmer told Yahoo that he was prepared to wage a proxy fight to unseat its board, an effort that could take a long time and give Google the liberty to forge ahead.

Yahoo!’s earnings were flat with last year except for a windfall one-time non-cash gain of $401 million stemming its stake in the parent company of Alibaba.com, the big Chinese e-commerce site that went public late last year.

Revenues in the quarter were up 9% to $1.82 billion, $1.35 billion, if you subtract the commissions it pays to partners. Funny number that. Google earned $1.3 billion in Q1.

Yahoo! left its disappointing 2008 revenue prediction unchanged at $7.2 billion-$8 billion.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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