San Francisco — For the first time since the software giant withdrew its takeover offer last May leaving the deal in limbo, Microsoft Corp. Chief Executive Steve Ballmer and Yahoo Inc. Chairman Roy J. Bostock met in New York last week; just two days after Yahoo named Carol Bartz its new CEO, according to a report in The New York Times.
The New York Times last week citing unidentified source who had been briefed on the meeting, but no details of the conversation so far have been released.
A tipster told the Silicon Valley gossip blog Valleywag that it was the second high-level closed-door discussion between Microsoft and Yahoo to come to light this week, and suggests that negotiations over a Web search deal between the two companies could be resuming.
Meanwhile, after taking office on Wednesday, Carol Bartz, Yahoo’s new chief executive, informed employees at the meeting that she had had an informal conversation with Mr. Ballmer since she was selected by the board to lead Yahoo, has certainly raised the possibility that the two companies might be able to agree on a takeover, with Microsoft possibly acquiring Yahoo’s search engine business.
A source with the knowledge of discussion said Bartz’s call to Ballmer as a “courtesy call,” but refused to give further details of the conversation.
Aiming to hit hard at the search market leader Google, Ballmer, in recent weeks, repeatedly expressed that Microsoft remains interested in doing a search partnership deal until new management was in place, and that he favored coming to an agreement sooner rather than later.
So he ventured when Bartz was appointed last Tuesday. Ballmer informed Bostock at the meeting that he would prefer a prompt pact between the companies, the person familiar with the discussion said. Microsoft already has a plan ready, he added. He declined to be identified because the discussion was supposed to be private.
Last year, after consolidation talks between the two companies failed, Microsoft and Yahoo tried out various ways to combine their search assets, including an outsourcing agreement or an outright sale of Yahoo’s search business to Microsoft, but the negotiations did not bear fruit.
Some vigorous people on Yahoo’s board and the company’s top brass, including Jerry Yang, the then chief executive, along with Susan L. Decker, who was then president, were frigid to the idea of giving up control over the search business. They asserted that advertisers increasingly wanted to buy search-related ads and display ads together, and that separating the two would not be in Yahoo’s long-term interest.
Bartz, the former Autodesk CEO, is facing daunting challenges as she takes the reins of Yahoo, which continues to lose ground to Google. Investors are hopeful that Yahoo will strike some kind of search deal that would reduce its costs and boost its profit.
After the appointment of Ms. Bartz, Mr. Yang returned to his role of “Chief Yahoo” and Ms. Decker resigned, though she remains with the company during a transition period.
If any talks or dialogues between the two companies are restarting, they are likely to be preliminary. Two people close to the companies said that currently no investment bankers were involved in any discussions.
Exact details of the discussion could not be learned, and spokesmen for Yahoo and Microsoft declined to comment.