SEATTLE - A person familiar with Microsoft's bid for Yahoo said Friday the software company is evaluating its offer in light of the economic climate and the Internet pioneer's deteriorating business.
The person, who asked not to be named because he was not authorized to speak publicly, said Yahoo Inc.'s share of the search market and overall condition have deteriorated since Microsoft announced its bid Feb. 1.
At the time, Microsoft offered $44.6 billion, or 62 per cent above Yahoo's market value. The deal is currently valued at about $41 billion, based on Friday's closing share prices.
Yahoo's board formally rejected Microsoft Corp.'s bid, saying it undervalues the company. The Silicon Valley company has since explored alliances with Google Inc., News Corp.'s MySpace.com and Time Warner Inc.'s AOL, but no alternative to Microsoft's offer has surfaced.
Yahoo spokeswoman Diana Wong declined to comment about assertions that the Web portal company's business is declining.
Yahoo and Microsoft both lost less than 1 per cent of their share of U.S. Web searches in February, the most recent month for which data are available, according to the research group comScore. During that month, Yahoo grabbed 21.6 per cent of searches, more than Microsoft's 9.6 per cent. Google Inc.'s share rose less than 1 point to 59.2 per cent.
In the intervening weeks, Yahoo released internal projects drawn up in December that call for the company's revenue to rise more than 70 per cent during the next three years.
The Web company also postponed its annual shareholder meeting, and thus the deadline for Microsoft to nominate its own slate of directors to fill Yahoo's board. A new date has not been set.
On Friday, the person familiar with Microsoft's thinking said the company has been patient -- but will be so only to a point.
"It's up to Yahoo's board to engage in meaningful negotiations with Microsoft," the person said.
Senior executives of the two companies reportedly met this week near Yahoo's Sunnyvale, Calif. headquarters but walked away without advancing the negotiations, according to The Wall Street Journal.
Spokespeople for Microsoft and Yahoo declined to comment when asked about the meeting.
Shares of Yahoo fell more than 3 per cent in after-hours trading to $27.40. Microsoft's stock edged up 1.5 per cent to $29.60.
