No Break In The Standoff Of Microsoft And Yahoo

SAN FRANCISCO — The deadline that Microsoft imposed on Yahoo to reach a negotiated merger agreement passed three days ago, and the two companies are still not talking.

At a conference at Microsoft’s headquarters in Redmond, Wash., its general counsel, Bradford L. Smith, said no meetings had been scheduled between the two companies.

Now all eyes are focused on Microsoft’s next move. The company warned this month that if its April 26 deadline was not met, it would seek to oust Yahoo’s board and take its offer directly to shareholders, perhaps at a lower price. The deadline passed Saturday with no sign that the two sides were negotiating.

Last Wednesday, Steven A. Ballmer, Microsoft’s chief executive, raised the possibility that his company would walk away from its offer. A day later, Christopher P. Liddell, the chief financial officer, said Microsoft was not inclined to increase its offer for Yahoo and would decide this week how to proceed. A Microsoft spokesman said Monday evening that no decision had been made.

If Microsoft abandons its pursuit of Yahoo, that company’s shares would probably fall. This would not preclude Microsoft from trying to reach a negotiated deal at a later date.

But many analysts say the most likely step is that Microsoft will initiate a proxy fight, a move that could bring Yahoo to the negotiating table.

A Yahoo spokesman declined to comment. The company has twice rejected Microsoft’s bid, originally valued at $44.6 billion, or $31 a share, calling it too low. But Jerry Yang, Yahoo’s chief executive, said Yahoo was not opposed to a sale to Microsoft at a higher price.

The value of Microsoft’s stock-and-cash offer has fallen to $42.1 billion, with a decline in the company’s share price.

A person close to Yahoo said it was still exploring other options that would allow it to remain independent. The person said that Yahoo executives were particularly focused on a search advertising partnership with Google.

Such a partnership would not preclude a deal with Microsoft, but may give Yahoo leverage to negotiate a higher offer.

But several antitrust experts say that a search advertising deal between Google and Yahoo is likely to raise objections from regulators.

Derek Brown, an analyst with Cantor Fitzgerald, said, “We see a Microsoft acquisition of Yahoo as the most likely outcome.” After months of searching for alternatives, Mr. Brown said, Yahoo appeared to lack any offer as attractive as Microsoft’s.

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