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Ballmer: No Talks With Yahoo on Search

Steve Ballmer told The Wall Street Journal on Friday that while Microsoft is open to a search advertising deal with Yahoo, no negotiations currently are taking place. Ballmer, Microsoft's CEO, was interviewed alongside the new president of Microsoft's Online Services Group, Dr. Qi Lu, who previously headed Yahoo's Engineering and Advertising Technology Group.

The addition of Lu marks the second high-level search expert that Microsoft has hired away from Yahoo in the past month. In November, Microsoft announced the hiring of Sean Suchter, Yahoo's former vice president of search technology.

Microsoft dropped an unsolicited acquisition bid for buying all of Yahoo in May, but Ballmer has repeatedly stressed the viability of a smaller search ad deal.

"I think a search deal makes great sense for Microsoft, and Yahoo, and I think I've been very open about that," Ballmer told WSJ. He said the hiring of Lu would simplify the logistics of such an integration but that "was not a factor in hiring Qi."

The key factor in an acquisition of Yahoo search would be what Ballmer calls a "critical mass in the advertising marketplace." Simply put, the two companies would have more advertisers, more "relevant ads" and they'd be "a real credible competitor" to Google, according to Ballmer. Google currently holds the No. 1 position in online search-engine use.

After nearly a year of courting a reluctant Yahoo, Ballmer emphasized a seize-the-day attitude.

"I think good ideas are usually better done quickly than slowly, so it would probably be better for both us, and certainly for Yahoo, if we were to do it sooner than later," he said. "But at the end of the day, that would have be something Yahoo would be as interested in as I have expressed our interest," said Ballmer to WSJ.

Ballmer also reiterated Microsoft's go-it-alone alternative to a search deal, in which the company would focus on the organic growth of its search business. To that end, Ballmer said Microsoft is prepared to spend "significant amounts of money in our online business, five to ten percent of operating income if we had to, for the next five years."

About the Author

Herb Torrens is an award-winning freelance writer based in Southern California. He managed the MCSP program for a leading computer telephony integrator for more than five years and has worked with numerous solution providers including HP/Compaq, Nortel, and Microsoft in all forms of media.

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