Analysis: A bad week for Yahoo

Yahoo's troubles started on Monday when Google called off its search deal

Yahoo is having a tough week. First it lost a lot of potential business after Google backed out of its search advertising deal, then chief executive Jerry Yang encouraged Microsoft to reconsider buying the search firm, a proposal which has now been frankly rebuffed by Microsoft chief executive Steve Ballmer.

In the midst of all this chaos, false rumours were circulated that Yang would be quitting the firm. The rumours were apparently caused by stock manipulators trying to drive up Yahoo's share value.

Yahoo's troubles started on Monday when Google conceded to concerns from advertisers and regulators about Yahoo's involvement in Google's AdSense for Search programme.

Under the programme, Yahoo would have displayed search ads sold by Google and taken a share of the revenue. But regulators were critical of the deal because it would have given the two firms an 80 per cent market share.

"Pressing ahead risked not only a protracted legal battle but damage to relationships with valued partners," Google chief legal officer David Drummond said on Monday.

Yahoo's management had cited the search deal with Google as one of the main reasons for rebuffing an acquisition effort by Microsoft. As soon as the Google deal was off, Yang said that he wanted Microsoft to reconsider acquiring the firm.

"To this day the best thing for Microsoft to do is buy Yahoo," Yang was reported to have said at the Web 2.0 Expo in San Francisco. "At the right price, whatever that price is, we are willing to sell the company."

And now, according to a fresh wave of reports, Ballmer has responded by saying that Microsoft is no longer interested in buying Yahoo.

"We made an offer, we made another offer, it was clear Yahoo did not want to sell the business to us, and we moved on," he is reported to have told the Committee for Economic Development.

"We are not interested in going back and [reconsidering] the acquisition. They turned us down at $33 a share; move on."