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SAN FRANCISCO (AFP) - Microsoft on Saturday yanked its proposal to acquire Yahoo, saying the struggling Internet pioneer refused to budge on price despite the software giant upping its offer to nearly 50 billion dollars.

Talks aimed at resolving corporate dueling that began with Microsoft's offer on February 1 to buy Yahoo for 31 dollars per share ended with the two firms unable to close a multi-billion-dollar gap in price expectations.

“Despite our best efforts, including raising our bid by roughly five billion dollars, Yahoo has not moved toward accepting our offer,” Microsoft chief executiveSteve Ballmer said in a letter posted on his company's website.

“We continue to believe that our proposed acquisition made sense for Microsoft, Yahoo and the market as a whole.”

“After careful consideration, we believe the economics demanded by Yahoo do not make sense for us, and it is in the best interests of Microsoft stockholders, employees and other stakeholders to withdraw our proposal,” said Ballmer.

In the letter, addressed to Yahoo chief executive Jerry Yang, Ballmer said that earlier in the week Microsoft told Yahoo it was willing to raise its offer to 33 dollars per share.

The price increase added approximately five billion dollars to the bid and reflected a premium of more than 70 percent compared to the Yahoo share price on January 31, Ballmer noted.

“Yet it has proven insufficient, as your final position insisted on Microsoft paying yet another five billion dollars or more, or at least another four dollars per share above our 33 dollars offer.

Ballmer said in his message to Yang that Microsoft did not intend to go hostile and buy the company directly from shareholders.

“It is clear to me,” Ballmer wrote, “that it is not sensible for Microsoft to take our offer directly to your shareholders.”

Yahoo did not respond to AFP requests for comment.

“Microsoft did the smart thing - they walked,” said Silicon Valley analyst Rob Enderle. “Yahoo's stock price is going to come down like a rock on Monday.”

Analysts believe the Microsoft bid was propping up Yahoo's stock price, which will plummet now that the offer has been withdrawn.

“Yahoo is going to have to convince the market they are worth more than they were before the Microsoft offer,” Gartner analyst Van Baker told AFP. “They have their work cut out for them.”

Microsoft could watch Yahoo's stock price plunge, let the firm's board of directors take fire from unhappy shareholders, and then offer to buy the company for the same amount of money or less.

“Microsoft could be rolling the dice here,” Baker said. “They could be betting Yahoo's stock price is going to collapse and they will be able to get it for even less.”

Baker is among the analysts who doubt Microsoft would get its money's worth from buying Yahoo and think the software king would be better off acquiring a host of promising Internet startups.

Microsoft wanted to merge its Internet resources with Yahoo's worldwide offerings to gain ground on undisputed online advertising juggernaut Google.

“There are other acquisitions Microsoft can make which, when multiplied, could put them in a better position than buying Yahoo,” Baker said.

SAN FRANCISCO (Reuters) - Microsoft Corp withdrew its offer for Yahoo Inc on Saturday as negotiations fell through on price, even after the software giant raised its bid by about $5 billion to $47.5 billion.

Microsoft Chief ExecutiveSteve Ballmer said his company increased its offer to $33 per share, from the $31 per share cash-and-stock bid that it initially made on January 31. But Yahoo was looking for $37 a share, Ballmer said.

“Despite our best efforts, including raising our bid by roughly $5 billion, Yahoo has not moved toward accepting our offer,” Ballmer said in a statement.

“After careful consideration, we believe the economics demanded by Yahoo do not make sense for us, and it is in the best interests of Microsoft stockholders, employees and other stakeholders to withdraw our proposal,” said Ballmer.

Yahoo was not immediately available for comment.

Laura Martin, a senior analyst at Soleil Securities, said Yahoo was demanding too high a price and she expected its shares to fall $8 on Monday when trading resumes on the Nasdaq. The shares closed up nearly 7 percent at $28.67 on Friday on hopes of an agreement between Microsoft and Yahoo.

“The Yahoo guys want too much money for their company. We think $33 a share is fair in the context of the weakening economic environment and adverse advertising trends,” Martin said, who has a “hold” rating on Yahoo shares.

“I think you'll see a number of shareholder lawsuits on Monday. They've prioritized employees over shareholders in the hopes that someday they can create more than $8 billion of value, even if they have no track record of doing so,” she said.

Yahoo had previously refused to enter formal negotiations with Microsoft, saying the initial price it made public in February did not properly value Yahoo's search and display advertising technology, or its overseas holdings.

Yahoo has also courted a possible deal with Time Warner Inc's AOL Internet division and a search advertising partnership with Google Inc.

In a letter to Yahoo Chief Executive Jerry Yang, Ballmer said he was concerned such plans would hurt Yahoo's own search and display advertising strategies, and impair its ability to retain talented engineers.

“We regard with particular concern your apparent planning to respond to a “hostile” bid by pursuing a new arrangement that would involve or lead to the outsourcing to Google of key paid Internet search terms offered by Yahoo today,” he said.

“In our view, such an arrangement with the dominant search provider would make an acquisition of Yahoo undesirable to us,” Ballmer said in his letter, made public on Saturday.

Microsoft wants to buy Yahoo to gain a stronger foothold in its battle with Web search leader Google, which is rapidly expanding into the software maker's own turf with new Web-based applications.

Yahoo's advisers had initially said it would not negotiate with Microsoft for anything less than $40 a share, a person familiar with Microsoft's thinking said. But amid threats by Microsoft to launch a hostile takeover, Yahoo CEO Jerry Yang suggested a price of $38 a share, the person said.

On Saturday, Yang and Yahoo co-founder David Filo met Ballmer and Microsoft's Platforms & Services Division President Kevin Johnson in Seattle, where they communicated that Yahoo's board was willing to cut a deal at $37 a share, although the two co-founders remained committed to a dollar more per share, the source said.

(Additional reporting by Michele Gershberg, Kenneth Li and Tiffany Wu in New York, editing by Doina Chiacu)

SEATTLE - Microsoft says it’s dropping its three-month-old bid to buy Yahoo because the two sides can’t agree on an acceptable sale price.

Microsoft Chief ExecutiveSteve Ballmer says in a letter sent to Yahoo on Saturday that the software maker was willing to pay $47.5 billion for Yahoo. That’s $33 per share.

Ballmer says Yahoo insisted that Microsoft pay at least $53 billion. That’s $37 per share.

Microsoft’s original offer was $44.6 billion, or $31 per share.

KUALA LUMPUR (AFP) - Malaysian police raided the home of a top Internet blogger after he posted an article implicating the deputy premier and his wife in the murder of a Mongolian model, reports said Saturday.

Raja Petra Kamaruddin, founder of the popular Malaysia Today site, said police officers questioned him and seized his computers over the article, “Let's send the Altantuya murderers to hell,” the Star daily reported.

The newspaper said Raja Petra was being investigated as a result of the article implicating Deputy Prime Minister Najib Razak and his wife in the case.

“I can only speculate that I got a bit too close to the bone and this is frightening some people and they want me to back off,” Raja Petra told AFP.

“I suspected they would pounce on it because it was a very hard-hitting article. If we try to be too safe every time, then we'd end up doing nothing.”

Najib, who has been named by Prime Minister Abdullah Ahmad Badawi as his successor, has denied any involvement in the high-profile murder case involving his close associate, political analyst Abdul Razak Baginda.

The analyst was charged with abetting the October 2006 murder of Mongolian woman Altantuya Shaariibuu, 28, whose body was blown up with explosives.

Two police officers from the Special Action Force (UTK), whose duties include guarding Malaysia's prime minister and deputy, are charged with the killing. A court case is ongoing.

Najib's wife, Rosmah Mansor, cautioned readers not to believe the allegations about her, the Star reported.

“Whatever you read on the Internet, don't take it as it is. I guarantee that all the stories… about me are not true,” she said, according to the newspaper.

Last year Raja Petra was also questioned by police after posting material that drew allegations of insulting Islam and the king — triggering condemnation from media watchdogs, which have accused Malaysia of suppressing press freedom.

TALLINN (AFP) - Skype guru Ahti Heinla and Microlink and Delfi founder Rainer Nolvak put cutting-edge IT technology and 40,000 volunteers to work Saturday to clean-up the tiny Baltic Sea state of Estonia.

Heinla and Nolvak used special software based on Google Earth, positioning software for mobile phones and mobile phones with GPS to map and take images of illegal garbage dumps across the country.

“The aim is not just to clean the fields and forest from the enormous amount of garbage but we also wish to kind of clean the brains of those people who have left that garbage in nature,” Tiina Urm, a spokeswoman for the cleanup campaign told AFP.

The innovative software also brings the massive garbage collection campaign virtually into living rooms where Estonians can follow its real-time progress, organisers said.

Dubbed “Teeme Ara 2008″, the campaign covers all 45,227 square kilometers of Estonia that won independence from the Soviet Union in 1991 and has since developed a major IT industry.

The project aims to recycle 80 percent of the estimated 10,000 tonnes of garbage in illegal dumps. A map of the garbage dumps can be seen at: http://www.teeme2008.ee/?op=body=55 ar/mas

BERLIN (AFP) - German telecommunications giant Deutsche Telekom is examining a possible bid for loss-making US mobile provider Sprint Nextel, Germany's Der Spiegel said Saturday.

“The Sprint project is top priority,” the weekly news magazine said, while specifying that there is “for the moment” no formal offer for shares or a takeover attempt and no active negotiations.

Number three in the US mobile market, Sprint, if allied to Deutsche Telekom's T-Mobile USA affiliate, could rival America's number one provider, AT&T Wireless.

Sprint is seen as a “soft target” for Europeans because of a weak dollar against the euro and a fall in share value, Der Spiegel said, ahead of publication of the weekly magazine on Monday.

The company has posted steep 2007 losses with 30 billion dollars in exceptional costs relating to its acquisition of Nextel. Dividend payments were suspended indefinitely at the end of February.

Sprint also announced in mid-January that it was cutting 4,000 jobs and closing 125 company-owned retail stores in anticipation of “downward pressure” on its profits in the coming year.

HAVANA - Cubans are getting wired. The island’s communist government put desktop computers on sale to the public for the first time Friday, ending a ban on PC sales as another despised restriction on daily life fell away under new President Raul Castro.

A tower-style QTECH PC and monitor costs nearly US$780 (euro505). While few Cubans can afford that, dozens still gawked outside a tiny Havana electronics store, crowding every inch of its large glass windows and leaving finger and nose prints behind.

Inside, four clerks tore open boxes, hastily assembling display computers. By the time a sign went up listing the PCs specifications, more than a dozen shoppers were lined up to get in.

“Look at that!” murmured Armando Batista as he pressed against the window. Although he can’t afford to buy one, he said, “these are good for a start.”

The gray and black QTECHs, complete with DVD players, bulky CRT monitors and standard-issue black mice and keyboards, are the only model available.

The Cuban PCs have Intel Celeron processors with 80 gigabytes of memory and 512 RAM and are equipped with Microsoft’s Windows XP operating system. Both could be violations of a U.S. trade embargo, but not something Washington can do anything about in the absence of diplomatic relations with Havana.

Clerks said the PCs were assembled by Cuban companies using parts imported from China. For about $80 (euro52) less, buyers in the U.S. can get a desktop with more than twice the memory, a 80GB SATA hard drive and 22-inch LCD flat screen monitor.

The crowded store in central Havana’s Carlos III shopping center is the only outlet in the country now selling the PCs. Clerks at a few other government-run stores — where Cubans must buy everything — said they expect to receive deliveries sometime after next week.

Brian Brito, 14, saved his allowance for two years to buy himself a PC for his upcoming 15th birthday.

“It’s good for playing games,” he said, while lugging his new computer from the mall.

But his mother had other ideas. “He’ll use it for school, for learning,” she said. “And besides, it’s a form of healthy entertainment.”

Except for some trusted officials and state journalists, most Cubans are banned from accessing the Internet at home. So many of these new computers may never be connected to the Web.

Some people buy limited e-mail access on the black market, usually sharing an account with the authorized holder, who usually works for the state. Even if they could access the Web, Cubans can’t shop on line because they don’t have credit cards.

Raul Castro promised to eliminate many of these prohibitions when he assumed the presidency on Feb. 24, after his ailing 81-year-old brother Fidel resigned. Besides selling consumer goods, he has ended bans that kept most Cubans from having cell phones, staying in luxury hotels or renting cars.

An internal government memo had indicated that PCs, DVD players, motorbikes and plug-in pressure cookers would be sold for the first time in April. Everything but the computers made it to the shelves last month.

Computers have been sold on Cuba’s black market for years — at prices comparable to the US$780 (euro505) now seen in the store. But now that computers are available legally, some consumers expect black market prices to fall.

The government controls more than 90 percent Cuba’s economy, paying an average state salary of US$19.50 (euro12.50) per month. But most Cubans have access to extra income through jobs with foreign firms, tips from working in tourism or money sent by relatives living abroad.

Thousands have snapped up phones and coveted kitchen appliances in recent weeks.

“Hotels, cell phones, DVD, Cuba is changing a lot,” said Oscar Perez, who came to help his 14-year-old cousin carry his new computer to the car. “That’s positive. But we want more.”

SAN FRANCISCO - Microsoft Corp. finally dangled a higher takeover bid in front of Yahoo Inc. Friday, hoping to reach a friendly deal after weeks of saber rattling.

The Redmond, Wash.-based software maker upped its offer beyond the original value of $44.6 billion, or $31 per share, according to a person familiar with the matter. The specifics of the new offer weren’t known by this person, who didn’t want to be identified because the negotiations are still confidential.

The New York Times, citing unnamed sources, reported Microsoft boosted the offer by “by several dollars” per share, lending weight to the assertion by many market analysts that Microsoft can afford to pay up to $35 a share.

Representatives from Microsoft and Yahoo declined to comment on the negotiations. The talks were expected to continue into the weekend.

In an intriguing twist, Microsoft Chairman Bill Gates and Yahoo President Susan Decker were both expected to be in Omaha, Neb. this weekend to attend Berkshire Hathaway Inc.’s annual meeting. Both Gates and Decker are on the board of the company led by famed investor Warren Buffett.

The prospect of a sweetened offer lifted Yahoo shares 80 cents in extended trading after surging $1.86, or nearly 7 percent, to finish the regular session at $28.67.

Sunnyvale-based Yahoo began pressing for a higher offer shortly after Microsoft made its unsolicited bid in February. That offer, which was made half in cash and half in stock, is currently valued at $42.3 billion, or $29.40 per share, reflecting the decline in Microsoft shares since it began its pursuit of the Internet pioneer.

Microsoft Chief Executive Steve Ballmer had held firm, insisting the original offer was fair in light of Yahoo’s eroding profits during the past two years. He threatened an attempt to oust Yahoo’s board if the 10 directors, including Chief Executive Jerry Yang, didn’t accept the offer by April 26.

Now that Yahoo has forced the issue by letting the deadline pass, Ballmer appears ready to put more money on the table.

Microsoft’s board reportedly met earlier this week to consider raising the bid as high as $33 per share, or about $47.5 billion.

Several of Yahoo’s shareholders are reportedly holding out for at least $35 per share, a price that would value the deal at about $50 billion.

Microsoft offered to buy Yahoo for about $40 per share during confidential discussions held in early 2007, but Yahoo’s struggles since then make it unlikely the revised bid will be that high.

In a comments to Microsoft employees Thursday, Ballmer said he has a price in mind but didn’t reveal it.

“I know exactly what I think Yahoo is worth to me, exactly,” Ballmer told the employees, according to a transcript filed with the Securities and Exchange Commission. “I won’t go a dime above, and I will go to what I think it’s worth if that gets the deal done.”

Most analysts have predicted all along that Microsoft eventually would buy Yahoo for $32 to $35 per share, so the news of Friday’s negotiations wasn’t a major surprise.

“It’s all going according to script,” said Ken Marlin, a New York investment banker specializing in technology deals.

The outcome of the weekend talks will likely ripple across the Internet.

If Microsoft and Yahoo shake hands on a deal, it will mark a significant step toward uniting two high-tech powerhouses whose online services are used by more than 500 million people worldwide. An amicable transaction also would make it easier to meld the two companies’ disparate technologies and cultures.

Should the two sides remain at loggerheads, Microsoft could still try to force a sale by trying to replace Yahoo’s board with 10 directors more inclined to approve a deal.

But that risky maneuver, known as a proxy contest, would likely entail several months of mudslinging with no guarantee of success.

Even if Microsoft were to prevail in a hostile takeover, it could wind up with buyer’s remorse because the hard feelings provoked by the battle would drive off many of the Yahoo employees needed to make the deal pay off, said Arthur Dudley, a New York lawyer specializing in mergers and acquisitions.

“The trick for Microsoft is to figure out where the tipping point is,” Dudley said. “They probably don’t want to do a hostile takeover and just wind up with some more computer software and a bunch of empty desks.”

Ballmer also has said Microsoft might simply withdraw its offer and walk away from Yahoo. Most analysts doubt Microsoft will give up the chase because Yahoo’s still-prized Internet franchise would give the software maker its best chance to chip away at Google Inc.’s dominance of the booming Internet search and advertising market.

Google’s specter may have prodded Microsoft’s higher bid. Yahoo is reportedly nearing a long-term deal that would allow Google to sell ads on its Web site. Although the alliance might be blocked by antitrust obstacles, Microsoft likely wouldn’t want to risk the chance of Google gaining access to Yahoo’s vast audience.

Yahoo executives think the company is well positioned to bounce back from its recent malaise, but Dudley doubts the company’s board will resist Microsoft if its new offer is sweet enough.

“Yahoo’s board won’t have a lot of choice if the price is right,” Dudley said. “Now, everyone is just scratching their heads trying to figure out what the number is.”

___

AP Technology Writer Jessica Mintz in Seattle contributed to this story.

SpringSource, which has automated aspects of complex Java development with its Spring Framework, wants to make deployment of resulting applications easier with its SpringSource Application Platform 1.0.

The open source company said this week its lightweight version of an application server will compete with commercial application servers, such as Oracle's WebLogic and IBM's WebSphere, as well as Red Hat's JBoss. But for it to compete with such heavyweights, SpringSource will need to convince IT managers that it can be used in production.

Rod Johnson, the lead developer of Spring Framework and CEO of SpringSource, said in an interview that JBoss got established because it was an option for running Java applications while they were under development. It could be downloaded for free and used to test drive application code instead of requiring developers to license a commercial product. As JBoss proved itself fit for development, some users began to implement it in production. Johnson believes the SpringSource Application Platform 1.0 will follow a similar path.

“Application Platform brings to the application server category the same benefit we brought to the development category,” that is, simplification and ease of use, said Johnson.

It also, by design, falls short of what the commercial application servers can do because the Spring development method seeks to avoid the complex requirements of producing Enterprise Java Beans. Application Platform won't run EJBs, while WebLogic and WebSphere and open source JBoss all will.

As a lighter-weight application server, Application Platform 1.0 can detect what Java runtime elements are needed for a given set of Java modules and implement only what's needed, giving it a smaller footprint, said Johnson.

To produce Application Platform, SpringSource has seized upon work done by the OSGi Alliance, founded in 1999 to promote Java module interoperability. The alliance is an industry consortium that includes IBM, Sun Microsystems, Oracle, and SAP. OSGi has produced a Java module-handling capability that recognizes which version of a component has been called, what its dependencies are, and what other components will work with it. SpringSource built the OSGi module handling into the Dynamic Module Kernel of Application Platform 1.0.

Another element of SpringSource's application server is the Eclipse Foundation's Equinox, a Java runtime environment for applications produced by the many tools that plug into the Eclipse programmer's workbench. Equinox is a Java device equalizer, allowing Java code to gear itself to both large servers and small devices, such as personal digital assistants or smartphones.

The SpringSource application server also makes use of Apache Tomcat, an engine for running Java Servlet commands on a Web server and managing a Web application.

Johnson emphasized that SpringSource was taking a natural step by venturing into the deployment environment. The concepts guiding the tools used to develop lightweight Java applications need to be applied at deployment time as well. While Spring started out with a core Java developer's framework, what's now known as the Spring Portfolio includes Spring .Net, Spring Web Services, Spring LDAP, and Spring Security as well as the framework.

SpringSource is likely to find that the competition is tougher the further it moves from development into deployment middleware, an arena that IBM, Oracle, Sun Microsystems and Red Hat's JBoss — each with its own Java expertise — all aspire to.

Application Platform 1.0 is available as beta open source code at the SpringSource site, with general availability coming in June. SpringSource will offer free download and Enterprise subscription versions, with no pricing set yet on an Enterprise subscription.

See original article on InformationWeek.com

A federal court has decided that AOL, Yahoo, and RealNetworks must pay higher licensing fees for music broadcast over the Web.

The U.S. District Court in New York this week rejected the companies' request to base the amount of money paid to songwriters and music publishers on revenue directly attributable to music uses. Instead, the court said members of the American Society of Composers, Authors, and Publishers (ASCAP) are entitled to a rate based on a formula in which gross Web site revenue is multiplied by the portion of Web site activity that is music-intensive.

The Digital Media Association, the trade group representing the three companies, said Friday it did not dispute that Internet companies should pay fair royalties. “We are disappointed, however, that the court ruled that online services' royalties should be based in part on service-wide revenue, not simply on revenue directly attributable to music usage,” Jonathan Potter, executive director of DiMA said in a statement.

DiMA said it is studying the court's 153-page decision, and the only certainty is that the rate formula would require several weeks of consideration, including possible court hearings, before its impact is known. DiMA has posted the ruling on its Web site.

ASCAP said the decision covers license fees for periods starting July 1, 2002, and continuing through Dec. 31, 2009. The organization estimated that the court's formula would lead to a total payment of $100 million from the three companies. The case involves songwriters and music publishers only. Record companies are not a party.

“The court's finding represents a major step toward proper valuation of the music contributions of songwriters, composers, and publishers to these types of online businesses — many of which have built much of their success on the foundation of the creative works of others,” Marilyn Bergman, president and chairman of ASCAP, said in a statement.

Content providers are seeking a bigger share of the growing streaming video and music market, which will generate $70 billion over the next six years, according to Insight Research. That number, however, could be much higher, if per-stream costs decrease faster than expected, or consumers accept Internet TV sooner than predicted, or 3G delivery takes off more quickly than forecast.

See original article on InformationWeek.com