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Despite intense negotiations and Steve Ballmer’s best efforts, the Microsoft buyout of Yahoo! is off, for now. With top executives unable to reach a price per share agreement, Microsoft withdrew their $33 per share offer. Yahoo! co-founder Jerry Yang reportedly asked for $37 per share for his company, which Ballmer was unwilling to meet. Yang maintained that the Microsoft offer undervalued Yahoo!, despite their closing price of $19.18 on January 31st, the day when possible deal became public. In a press release Ballmer explains his decision to give up: “We believe the economics demanded by Yahoo do not make sense for us, and it is in the best interests of Microsoft stockholders, employees and other stakeholders to withdraw our proposal.”

In the wake of the announcement, Yahoo! stock sank, reportedly off 16% by 10 A.M. on Monday. This reaction shows just how much shareholders and traders were depending on a successful negotiation, and Yahoo!’s next moves will determine whether they stay afloat. They’ve begun more than a few new ventures in recent weeks as an attempt to boost stock prices in the face of Microsoft’s offer, but will any of their efforts prove successful without the deal going through?

First, Yahoo! launched a news-rating website called Buzz, which gives readers the ability to vote on their favorite content by “buzzing it up”. The most popular stories and pages will rise to the top of the page, giving readers a chance to see what others in the Yahoo! community are reading. Buzz attempts to mimic the success of popular link-sharing sites like Digg, Del.icio.us, and StumbleUpon while spreading the success of Yahoo!’s news service.

Also, Yahoo! entered into a controversial partnership with Google for a short experiment in ad sharing. Google was allowed to place ads on 3% of Yahoo’s various sites, which prompted a share rise of 7% upon announcement. The strategy lasted just two weeks, but some experts speculated that it could signal a longer-term cooperation between Google and Yahoo!. The controversy comes from anti-trust watchdogs and regulators, who would likely strike down a true partnership between the two, as it would consolidate web advertising in too few hands.

Lastly, Yahoo! plans to unify many of their various services into one network, giving users the opportunity to create profiles and share their activities with friends. The social networking model would tie together their popular email service, Flickr (a photo storage & sharing site), Del.icio.us (social bookmarking site), Upcoming (social calendar site), and many others. They plan to sideline Yahoo! 360°, a social networking site that hasn’t caught on in a major way. Rather than building a social network, Yahoo! plans to build social features and conveniences into each of their services, providing users with a unified, customizable dashboard.

While many had hoped that a deal would be imminent (particularly Yahoo! shareholders), executives at Yahoo! were not ready to give up just yet. These recent announcements could be what it takes to keep them in the game, albeit not on the level with Google. As for Microsoft, they’ll have to wait for another opportunity to jump into the web market.

Monday, May 5th, 2008 You can skip to the end and leave a response. Pinging is currently not allowed.

By Haley January Eckels