Microsoft has all but shut the door on the prospect of resuming talks to buy all or part of Yahoo. Speaking at the company’s annual meeting for analysts on July 24, Chief Financial Officer Chris Liddell said a Yahoo deal at this point “essentially makes no sense.”
If Yahoo is no longer the remedy for Microsoft’s ailing online operations, what is? The software giant spent part of the day trying to persuade analysts that it’s got something better in mind. Yet with Wall Street growing increasingly impatient to see results from its online operations, Microsoft gave only a glimpse into what to expect in terms of ongoing spending and returns. Chief Executive Steve Ballmer said the company plans to continue spending 5 percent to 10 percent of operating income, a modest amount relative to the potential returns, he argued. And those returns could hit 20 percent to 40 percent if Microsoft is successful, Liddell said, though he didn’t disclose a time frame for when that might happen.
Microsoft also pulled back the curtain on plans to provide Web search tools to users of Facebook, and to place search-related ads on pages of the social network by the end of 2008. The Redmond [Wash.] company last year paid $240 million for a tiny, 1.6 percent stake in Facebook, a swiftly growing Web site that boasts some 90 million registered users. Deepening ties with Facebook is probably a smart move.
The Google Gap Widens
Still, some Wall Street analysts came away from the meeting wishing Microsoft had said more. “My expectations were low and they exceeded my expectations, but they didn’t give me everything I wanted,” Sanford C. Bernstein analyst Charles Di Bona said. “It would have been nice to have been more concrete about what was game-changing.”
That’s important because now Microsoft is losing the game,…