By Daisuke Wakabayashi and Kenneth Li SEATTLE/NEW YORK (Reuters) - Microsoft Corp wants to stick with its original takeover offer for Yahoo Inc, but

By Daisuke Wakabayashi and Kenneth Li

SEATTLE/NEW YORK (Reuters) - Microsoft Corp wants to stick with its original takeover offer for Yahoo Inc, but is not ruling out News Corp joining its bid or other options, a source close to the company said on Friday.

Separately, a source familiar with the matter said News Corp continues to talk directly with Yahoo on reaching a deal without Microsoft. The source declined to provide details on what a potential deal structure would look like.

The source close to Microsoft said the company's preference all along has been to retain the original deal structure that would involve paying $31 per share in cash and stock to acquire Yahoo. But Microsoft has not ruled out bidding with partners.

Earlier, the Wall Street Journal, which is owned by News Corp, reported that people close to Microsoft said the software maker plans to pursue Yahoo alone rather than with News Corp, which had held talks with Microsoft on a joint bid for Yahoo.

The Journal also said Yahoo's board of directors met on Friday to assess their options, including deepening their negotiations with Time Warner Inc's AOL on a deal to merge Yahoo and AOL, but that no decisions were reached.

Spokesmen for Microsoft, News Corp, Time Warner and Yahoo were not immediately available to comment.

The newspaper's Web site cited unnamed sources as saying that Time Warner had been expecting Yahoo's board to move closer to backing an AOL deal and that Yahoo's delays suggested that the company was hesitant to proceed.

A source familiar with the situation was unwilling to confirm to Reuters the Journal's characterization of Time Warner's thinking, but said that talks continue between Time Warner and Yahoo.
Microsoft had threatened last Saturday to launch a hostile bid for Yahoo and could lower its offer of $42.4 billion around April 26 if it does not get a deal.

The New York Times reported on Wednesday that News Corp was in talks to join Microsoft's bid for the Web pioneer.

Yahoo also announced on Wednesday a test to outsource Web search advertising to Google Inc, which sources say is part of a three-way alliance that would combine Yahoo with Time Warner Inc's AOL instead of Microsoft.

(Additional reporting by Eric Auchard in San Francisco; Editing by Braden Reddall)

Google says Microsoft's Yahoo buy might hurt Internet

BEIJING (Reuters) - Google Inc, the world's leading search engine, said on Monday it was concerned about the free flow of information on the Internet if Microsoft Corp were to succeed in acquiring Yahoo Inc.

Last month, Microsoft proposed buying Yahoo in a deal originally worth $44.6 billion, but Yahoo's board has rejected the offer, saying it was too low.

"We would be concerned by any kind of acquisition of Yahoo by Microsoft," Chief Executive Eric Schmidt told reporters.

"We would hope that anything they did would be consistent with the openness of the Internet, but I doubt it would be."

Schmidt pointed to Microsoft's past history and "the things that it has done that have been so difficult for everyone", but he did not elaborate.

Last year, a European court upheld a landmark 2004 decision that Microsoft abused the near-monopoly power of its Windows operating system to damage competitors, along with a 497 million euro ($695 million) fine.

"We are concerned that there are things Microsoft could do that would be bad for the Internet," said Schmidt.

Microsoft Chief Executive Steve Ballmer pledged earlier this month that his company would gain market share against Google in online advertising and Web searching, even if led to his "last breath" at the company.

In a Reuters poll of financial analysts, the overwhelming majority said they believed Microsoft would eventually succeed in buying Yahoo, but many said they felt it may not be the best use of its ample cash reserves.
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Microsoft and Yahoo met to discuss merger

NEW YORK (Reuters) - Microsoft Corp (MSFT.O: Quote, Profile, Research) and Yahoo Inc (YHOO.O: Quote, Profile, Research) met on Monday to discuss Microsoft's takeover offer for the Internet company, the Wall Street Journal reported on Friday, citing people familiar with the matter.

The meeting was said to be the first since Microsoft made its unsolicited offer for Yahoo, worth nearly $42 billion, on January 31. Yahoo rejected the offer as inadequate last month.

The Journal said the meeting wasn't a negotiation and that no bankers were present.

The session was intended to allow Microsoft to present its vision of a combined company, and Yahoo executives mostly listened, the Journal quoted one of the sources as saying.

Microsoft and Yahoo spokesmen declined to comment.

source : www.reuters.com