Microsoft Says Yahoo Not a Strategy

Microsoft chief executive Steve Ballmer said Friday that buying Yahoo was not a strategy in itself and that dropping the bid meant the company now had $50 billion to spend on other acquisitions.

"Yahoo was never the strategy we were pursuing, it was a way to accelerate our online advertising business," he told a packed hall at a technology conference in Moscow.

"We will spend money on some acquisitions. You can do a whole lot of things with $50 billion," he said.

Ballmer was responding to questions about what he planned to do with Microsoft's huge cash pile after it walked away from a proposal to buy Internet media company Yahoo for $47.5 billion, or $33 per share, earlier this month. Yahoo had rebuffed the offer, saying it would only settle for $37 per share.

Ballmer, who met Deputy Prime Minister Sergei Ivanov at the conference, was echoing a refrain heard from him in recent weeks: At a May 1 employee meeting, he said Yahoo was valuable as part of a strategy to beat Microsoft arch-rival Google, but that there were limits on the price it would pay.

"Yahoo's not a strategy, it's a part of a strategy," Ballmer had said three weeks ago in Redmond, Washington. "We're interested to pay for it [Yahoo] at some level and beyond that level we're not willing to pay for it."

Talks broke down May 3 and Microsoft said it had "moved on."

Last week, the two companies said new talks were under way on a more limited deal but neither side disclosed the terms. A source familiar with the discussions said Microsoft had proposed buying Yahoo's search business and taking a stake in Yahoo after Yahoo sheds its substantial Asian assets.