Microsoft scraps Yahoo! bid, invests in Web drive
- Added:
- Jul 28, 2008
Microsoft is making heavy investements in its internet business as the software giant finally said it has finished pursuing rival Yahoo.
Chief Executive Steve Ballmer said "There's nothing under discussion between the two of us. We had a set of principles, we talked about them, it didn't work out," he said. "Fine, we're done. We can move on."
Ballmer said Microsoft is willing to endure online division operating losses that amount to between 5 percent to 10 percent of the company's total operating income, which reached $22.5 billion in fiscal year 2008, until the search and advertising business reaches "scale."
He did not specify on how long this period of losses would last, but said the risk was worth the potential return.
Microsoft's online division has posted eight straight quarters of losses. It lost $1.23 billion in the past fiscal year, twice as much as it had lost in fiscal 2007 and about 5.5 percent of Microsoft's total operating income.
Ballmer said its online businesses could eventually account for most of the economic value created by the world's largest software maker.
"There is this huge, huge, huge new opportunity around the Internet and online and we have to embrace that opportunity and invest in that opportunity," Ballmer said.
Ballmer described Yahoo, the world's second-largest provider of Web search and related advertising, as a quick way for Microsoft, a distant No. 3 player, to gain scale in order to compete more effectively with leader Google.