Microsoft may seek other deal to fight Google

Microsoft could seek a variety of deals after walking away from Yahoo, but few would be comprehensive enough to let it challenge Google Inc’s domination of online advertising.

When Microsoft Chief Executive Steve Ballmer alleged off talks with Yahoo on Saturday afterwards the Web aggregation abandoned his US$47.5 billion offer, he gave up what he and investors saw as the fastest way to abound bound in announcement and online casework to booty on bazaar baton Google.

“Ultimately, our ambition is to body the industry-leading business in search, online advertising, media, and amusing networking,” Ballmer wrote in a Saturday letter to employees, acquired by Reuters.

“Although the accretion of Yahoo would accept accelerated our adeptness to bear on our action in announcement and online services, I abide assured that we can accomplish our goals afterwards Yahoo,” Ballmer wrote.

Ballmer said Microsoft could go it alone, but a likelier book would be to use some of the banknote it dangled in advanced of Yahoo to accomplish abate acquisitions or bang up partnerships.

It could anatomy a amalgamation with Time Warner Inc’s AOL assemblage or Account Corp’s Fox Interactive Media unit, which includes MySpace, to draw announcement to its own Web properties.

AOL admiral contacted Microsoft about a accessible amalgamation aftermost ages afterwards Ballmer set a three-week borderline for Yahoo to accede to a accord or face a adverse battle, a being abreast on those discussions said on Sunday.

News Corp has additionally accomplished out to Microsoft in contempo weeks to analyze possibilities, including behest for Yahoo jointly, sources ahead told Reuters.

An AOL official was not anon accessible for comment.

“A affiliation with or accretion of Account Corp’s Internet activities or AOL would be a start” in leapfrogging Google, said Peter Misek, an analyst who follows Microsoft for Canaccord Adams.

Google sites had about 590 actor different visitors in December, while Microsoft sites had 540 actor and Yahoo’s had 485 million, comScore abstracts show. By comparison, Time Warner properties, including AOL, had alone 274 actor visitors, and Fox Interactive Media sites had 158 actor visitors. Arguably, a Microsoft affiliation with AOL or FIM would not accompany the aforementioned numbers as a Microsoft-Yahoo amalgamate would.

LOTS OF LITTLE BUYS

Microsoft could additionally go on a arcade spree, affairs start-ups that body adult chase and online announcement platforms to cobble calm a claiming to Google, said Peter Falvey, a broker at Revolution Partners, a technology-focused advance bank.

“They could buy a lot of absorbing start-ups and use their business muscle,” Falvey said.

But none of these options would accommodate Microsoft the calibration it needs to attempt finer adjoin Google.

“Little things like affairs Digg would not move the aggravate for Microsoft,” said Todd Greenwald, an analyst at Nollenberger Capital Partners, apropos to a Web armpit that lets bodies abide and allotment account stories, videos and added files online.

Greenwald said Microsoft could allow to buy Facebook, in which it invested US$240 actor aftermost year, and use the amusing network’s acceptance to drive cartage to its Web properties.

But it would still not accompany the all-around allowances and cast acquaintance that a alliance with Yahoo would, analysts said.

“Scale and acceleration to bazaar are what Ballmer needs, and he can’t get it by architecture it organically,” said one being complex in the negotiations amid Microsoft and Yahoo, who wasn’t accustomed to allege on the almanac because the negotiations were confidential.

STILL A CHANCE FOR MICROHOO?

But Microsoft is beneath beneath burden to appear up with an addition accord than Yahoo is, analysts said. Microsoft could accept to sit it out and delay for an appropriate time to accomplish addition Yahoo bid, aback that makes the best cardinal sense.

Analysts apprehend Microsoft’s banal to acceleration abundantly aback the bazaar opens on Monday, advertence that investors are accommodating to be accommodating with Ballmer. Some ability achievement he has the faculty to accumulate on walking, alike if Yahoo tries to alarm him back.

“There are abundant skeptics out in Wall Street acreage that were absolutely analytic Microsoft’s strategy, and they will acclaim Microsoft for captivation close to the actuality that they had a amount in apperception and they’re not activity to overpay,” said Fred Dickson, a bazaar architect at D.A. Davidson & Co.