Microsoft's Ballmer: We're done discussing Yahoo acquisition

Microsoft Chief Executive Steve Ballmer reiterated his position on Yahoo at the company's annual shareholder meeting Wednesday, sending shares of the Internet giant tumbling.

"Let me be as clear as I think I've tried to be publicly," he said. "We are done with all acquisition discussions with Yahoo."

Ballmer also told the unusually small crowd of shareholders at the meeting that the economy will weigh on the company's business. Hiring at the company will be "much, much slower" this fiscal year and perhaps next, he said.

As he has several times since Microsoft withdrew its offer to buy Yahoo in May, Ballmer expressed interest in a "search collaboration" — a deal involving just Yahoo's Internet-search business in a bid to quickly gain ground on market leader Google.

"There's no active discussion on that front, but we'd be very open to it," Ballmer said.

Interest in Ballmer's thinking on Yahoo heightened this week because Jerry Yang resigned as Yahoo's CEO.

Yahoo shares, which slid in early trading with the broader market, began a deeper dive as Ballmer's comments hit the Web. Yahoo stock closed at $9.14, down $2.41, or 20.9 percent, less than a third of what Microsoft was originally willing to pay for the company in January.

Microsoft shares also took a beating, driven down along with all the major indexes by another wave of bad economic news. The company's shares lost $1.33, 6.8 percent, to finish at $18.29, their lowest point since St. Patrick's Day 1998, when they closed at $18.08 (split adjusted).

Some shareholders at the meeting welcomed Ballmer's definitive "no" on a Yahoo acquisition.

Jim Sullivan, of Kent, said one thing that keeps him calm as a Microsoft owner in rough economic times is the strength of the company's balance sheet.

"They have such a cash reserve, I don't feel so nervous about them like I do some other stocks," said Sullivan, who bought his shares 15 or 20 years ago.

He does not want to see the company spend its cash — $20.7 billion in cash and short-term equivalents at last report — on an acquisition of Yahoo. And one of the main reasons he attended the meeting was to hear Ballmer's thinking on the subject.

"Our strong financial position allows us to reinforce our competitive advantage by continuing to invest in R&D, to continue to make carefully targeted acquisitions and to continue to take a long-term view of the investment required for future growth," Ballmer said.

Other shareholders gathered at Meydenbauer Center in Bellevue wondered exactly how long-term that view would be.

Karen Robbins, who described herself as a children's author, first paid a public tribute to Microsoft and Bill Gates.

"I love Microsoft, I believe in the company," Robbins said during the question-and-answer period. "It is my only individual stock still left in my portfolio, I'm still hanging on to Microsoft and the dream."

Then she turned to Ballmer.

"And I remember I sat in this very same room several years ago and I believe it was Mr. Steve Ballmer who said, 'The best is yet to come.' So Mr. Ballmer, what year do you predict the best is yet to come?"

"For Microsoft, every year is better than the last one," Ballmer replied. "If we could get this economic thing headed the other direction — I'm not going to pretend we've got much control over that. You better call D.C. ... ."

It was one of the livelier moments in an otherwise quiet meeting. Microsoft Chairman Bill Gates gave a relatively brief speech on the future of software and thanked retiring board member Jon Shirley for "25 years of incredible service," calling Shirley a "mentor" to himself, Ballmer and "other key people at the company."

Steve O'Donnell, a Bellevue man who said he's been to every Microsoft shareholder meeting, said he counted about 250 people in the audience today. "I think this is the lowest turnout I've ever seen," said O'Donnell, sporting an "I'm a PC" sticker on the left shoulder of his windbreaker.

His idea for making the event more appealing: a shareholder gift, and he has one in mind.

"It wouldn't cost them hardly a dime or a nickel to give shareholders at the annual meeting a Zune, getting 'em out into the marketplace," O'Donnell said.

O'Donnell's friend Tom Twiggs wasn't so sure.

Twiggs reminded O'Donnell of the Washington Federal Savings shareholder meetings.

"It was a while before you could get a cup of coffee. They're really stingy. At a thrift institution, you expect that," Twiggs said.

Also of note:

• All nine board members were re-elected with at least 98 percent of votes cast.

• A new executive incentive plan was approved.

• An amendment to a stock-option plan for non-employee directors, doubling the amount of stock they can be awarded to 20,000 shares a year, was also approved.

• All three shareholder proposals were soundly defeated.

Benjamin J. Romano: 206-464-2149 or bromano@seattletimes.com