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Steve Ballmer said the deal would happen if the circumstances were right, that it wouldn’t if they were wrong.  He said walking away was an option.  He wasn’t kidding. 

Shocking many analysts who predicted a deal was likely or, at the least, a hostile takeover was the next step if no agreement was reached, Microsoft pulled the plug on their efforts to acquire Yahoo.

The reversal followed a face to face meeting in Seattle between Steve Ballmer and Jerry Yang, Saturday morning.  People familiar with the negotiations said Microsoft had increased its offer to $33, a share ($47.5 billion) but that Yahoo was unwilling to accept anything less than $37.

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Saturday,  Microsoft withdrew their bid to acquire Yahoo.  What follows is a reprint of  CEO Steve Ballmer letter to Jerry Yang and then Yahoo’s reply. 

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In early April, Microsoft issued Yahoo an ultimatum.  By April 26th, one way or another, Microsoft pledged, there’d be a decision.  Either Yahoo would accept, Microsoft would take their buyout offer to the shareholders, or they’d walk. Something would happen.  April 26th, along with earnings announcements from all relevant players, came and went.  The ultimatum deadline rang out with all the import of a fire drill in an empty building.

Today, its five days since the deadline’s expiration and we’re still waiting. When I searched for Yahoo with a Google News Search, I found 498 articles linked to the first hit.    That’s a lot of baited breath.

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While Kleiner Perkins is out raising a 13th fund, two gaming companies and one music discovery engine closed out April with fresh rounds of funding.

TURBINE:  Leading the April rounds was game publisher Turbine.  The Westwood, Massachusetts based game developer closed on a massive Series C to fuel their Massively Multi-Player Online Role Playing Games (MMORPGs) business.  According to regulatory filings, the company took an installment of $25million out of a possible $40m in the round. Granite Global Ventures led the financing and took a seat on the board to represent the Series C stockholders.  Prior investors Highland Capital, Polaris, Tudor Ventures and Columbia Capital all participated as well.

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Unlike rivals NBC (part of GE), ABC (part of Disney), or Fox (part of News Corp), TV Network CBS lacks the insurance and financial cover that comes from being part of a larger, more diversified conglomerate.   As a standalone network, nearly two thirds of the company’s revenues come from advertising.

This morning CBS reported their earnings.  Despite the exposure to a fluctuating ad industry, and despite challenges levied by the writers’ strike, the numbers proved mostly positive.   Total quarterly revenues were up 14% to $3.65 billion during the first quarter.   Overall, earnings came in at $244.3m or 36cents per share, a positive gain over 28cents per share earned during the same period last year.  On an adjusted basis, the EPS were 40 cents.

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Last week, Apple made a tiny debit from their enormous cash reserves to buy small semi conductor design firm PA Semi.  At approximately $278m, the deal barely shifts the multi billion dollar cash account on the balance sheet; still it has left many analysts, watchers and writers asking questions.  The first and most obvious is “why?” Why did a company that favors buying companies in the early stages of development buy a company with an established customer list? And why given Apples’ focus and success with consumer-focused products choose to invest in the challenging and cyclical semiconductor industry?

Another more macro set of questions (in a companion post to this article) query whether the deal represents a possible shift in Apple’s acquisition policies.  Was this the start of a more acquisition friendly Apple; one interested in taking advantage of weaknesses in the current financial markets to fortify underlying tech assets?

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Looking at Apple’s purchase of Palo Alto Semiconductor (PA Semi) opened the door to two core questions.  One, the micro look, questioned what Apple’s specific interests in the company were.   Why did they make the purchase?   Part 1 of this two part article series delved into that question in detail.  The second question is a recurring issue and more macro in focus: does this small scale purchase give any indication of a change in Apple’s M&A strategy? 

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