Are you sure?

Google in contest for Yahoo

Yahoo Inc. is looking at revisiting earlier talks to form an alliance with Google Inc. as an alternative to Microsoft's takeover proposal.

At $31 a share, Yahoo believes the bid undervalues the company, one source said. A second source close to Yahoo said it had received a procession of preliminary contacts by media, technology, telephone and financial companies. But the source said they were unaware whether any alternative bid was in the offing.

The Wall Street Journal reported on its website on Sunday that Google's chief executive, Eric Schmidt, called Yahoo's chief executive, Jerry Yang, to offer his company's help in any effort to thwart Microsoft's bid. Yahoo's efforts to find an alternative bidder could simply be a measure to pressure Microsoft to boost its bid.

Sanford C. Bernstein analyst Jeffrey Lindsay wrote in a research note that “the Microsoft bid of $31 is very astute” because it puts pressure on Yahoo management to take actions that could unlock the underlying value of Yahoo assets, which he estimates are worth upward of $39 to $45 a share.

Separately, Google Inc fired back on Sunday at Microsoft Corp's bid to acquire Yahoo Inc, accusing Microsoft of seeking to extend its computer software monopoly deeper into the Internet realm.

David Drummond, a Google senior vice president and its chief legal officer, said in a blog post that the combination of Microsoft and Yahoo could undermine competition on the Web and called on policy makers to challenge the combination.

Microsoft responded to Google's arguments by saying that a merger with Yahoo would create a “compelling number two competitor for Internet search and online advertising” to market leader Google. (Xinhua)