With Yang out, Microsoft may come back

On Monday many sources reveled that the resignation of Jerry Yang as chief executive of Yahoo might invite another offer from Microsoft.

Eric Jackson, an activist Yahoo shareholder who was among the investors angry with Yahoo's management for not accepting Microsoft's previous bid, reported, "I would expect Microsoft to come back within the next three or four months. I think Microsoft will come back because Microsoft needs Yahoo, despite what they've been saying publicly, and I think they know that."

Moreover, a former Yahoo executive who didn't want to be named also assumed that since Yang has left now, it may open wide door for an agreement with Microsoft.

The former Executive said, "There was a lot of bad blood during the last discussions between Yang and Microsoft executives." He also added, "I would assume that Microsoft's search business cannot do well on its own. Yahoo's (search business) cannot do well on its own and it makes a lot of sense to combine."

However, the executive also predicted that though Microsoft may not buy whole of the Yahoo, it may buy the search business at least.

The deal between Microsoft and Yahoo was canceled earlier this month by Microsoft CEO Steve Ballmer.

At a Committee for Economic Development of Australia lunch in Sydney on November 7, he said, "We tried at one point to do a partnership around search, not advertising. That didn't work either, so we moved on, and they moved on."

It must be noted that not much progress has been made by search businesses by Yahoo or Microsoft in competition with Google.

Jackson reported, "Even with the bad economy and decline of Microsoft's stock price, this is a deal that makes strategic sense." He further added, "It's a natural time given this move for Yahoo to reassess. The board is feeling incredible pressure and guilt and anger from shareholders for passing on the deal before."

When asked whether he thinks that Microsoft will get a deal this time, he said, "Yahoo shareholders now would be over the moon if they could get $20 a share, which is where stock was at a few weeks ago."