Report: Yahoo and Microsoft are once again on speaking terms

According to the Wall Street Journal, citing a source close to the process, during a meeting between high-ranking managers from Microsoft and Yahoo last Monday the two companies spoke for the first time about the takeover plans of the Redmond software corporation. The meeting was the first since Microsoft's 31 January takeover bid and marked a breakthrough in communications for the two corporate giants, following Yahoo's rebuff of the bid.

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The report goes on to say, however, that negotiations were not discussed during the meeting. Microsoft presented its plans for a common company to the Yahoo managers present at the meeting. But the newspaper is not clear on whether CEOs Jerry Yang and Steve Ballmer were present. Similar meetings have taken place between Yahoo and representatives of other possible partners, including Time Warner's AOL and Rupert Murdoch's news Corp.

Yahoo is currently under pressure, as its profits are falling. At the end of January, Microsoft presented a takeover bid of 31 US dollars per share, which Yahoo later declined as a undervalued, even though the 44.6 billion US Dollar offer came in at some 60 per cent over Yahoo's market value at the time the offer was made. The offer, a mix of cash and Microsoft shares, is now worth only 41.9 billion US dollars following a drop in the Microsoft share prices.

According to the Wall Street Journal, Microsoft has not increased the offer, partly because the company has not yet been permitted to review Yahoo's books. If the companies cannot come to an agreement, observers reckon that Microsoft will attempt a hostile takeover bid in order to take control of Yahoo's board. Recently Yahoo extended the deadline for nominations of candidates to its management board in order to gain more room to manoeuvre in the takeover negotiations.

(trk)