Ballmer's tongue again causes trouble for Microsoft

Editor’s Note: The following article is reprinted from Network World.

Microsoft Thursday issued a statement saying it still has no interest in Yahoo after CEO Steve Ballmer said that for shareholders a deal would make economic sense.

The company issued a terse statement to media around mid-day: “Our position hasn’t changed. Microsoft has no interest in acquiring Yahoo; there are no discussions between the companies.”

Ballmer’s words alone were a decent deal for Yahoo shareholders, who saw the stock rise $2.19 per share in just more than 60 minutes following the CEO’s remarks during his appearance at the Gartner Symposium in Florida. In the same time frame, Microsoft stock was up $2.10.

Ballmer has a history of using his tongue to nudge the stock market. In 1999, he told a group of technology journalists that tech stocks were overvalued and lumped Microsoft in that group, even saying the value of his company’s stock should be “less.”

Microsoft stock lost 5.1 percent that day; it was estimated that Ballmer lost billions on paper, given his stock holdings in the company. The tech-heavy Nasdaq index closed down 108 points or 3.77 percent, the Dow Jones Industrial Average closed down 205.48 points, and the market shuddered instinctively as other indices also fell.

At the Gartner conference Thursday, Ballmer said it is clear Yahoo did not want to sell, and added that there might be continuing opportunities to talk about search. After the talks between the two broke down the first time, Microsoft investigated just buying the search business from Yahoo.

Bloomberg.com quoted Canaccord Adams analyst Colin Gillis as saying Ballmer is “trying to set the stage for a lower valuation” on Yahoo. “There’s been a school of thought that’s long said that a Microsoft-Yahoo deal would happen over time just because of the obvious synergies.”

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