Yahoo's efforts to find an alternative bidder could simply be a measure to pressure Microsoft to boost its bid.
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SAN FRANCISCO - Yahoo Inc. would consider a business alliance with Google Inc. as one way to rebuff a $44.6 billion takeover proposal by Microsoft, a source familiar with Yahoo's strategy said yesterday.
Yahoo management is considering revisiting talks it held with Google several months ago on an alliance as an alternative to Microsoft's bid, which, at $31 a share, Yahoo management believes undervalues the company, the source said.
A second source close to Yahoo said it had received a procession of preliminary contacts by media, technology, telephone, and financial companies. But the source said they were unaware whether any alternative bid was in the offing.
Few natural bidders exist beside Google that could engage in a bidding war, and Google would be unlikely to win approval from antitrust regulators, some Wall Street analysts said Friday.
Yahoo's efforts to find an alternative bidder could simply be a measure to pressure Microsoft to boost its bid, which valued Yahoo at $44.6 billion when first disclosed Friday.
Sanford C. Bernstein analyst Jeffrey Lindsay wrote in a research note that "the Microsoft bid of $31 is very astute" because it puts pressure on Yahoo management to take actions that could unlock the underlying value of Yahoo assets, which he estimates are worth upward of $39 to $45 a share.
Separately, Google Inc. fired back yesterday at Microsoft Corp's bid to acquire Yahoo Inc., accusing Microsoft of seeking to extend its computer software monopoly deeper into the Internet realm.
Microsoft responded to Google's arguments by saying that a merger with Yahoo would create a "compelling number two competitor for Internet search and online advertising" to market leader Google.
Microsoft's proposed merger with Yahoo would combine the number one and number two suppliers of Web-based e-mail, instant messaging, and portals.
In making its case for the deal during a conference call Friday, Microsoft executives said Google - not Microsoft - was the one company antitrust regulators were likely to bar from buying Yahoo, based on Google's dominance in Web search.
Microsoft executives cited industry data showing Google has a 75 percent share of worldwide Web search revenue.
Collectively, Yahoo and Microsoft attract around 20 percent of Web searches, Internet measurement firms show.
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