Ballmer Tells Microsoft Troops He's Not Insane: Willing To Walk Away From Yahoo

Steve Ballmer said there's nothing new to report about Microsoft-Yahoo!, but he did use the presentation to the employees to explain the motivation for going after Yahoo!, take some shots at a Google-Yahoo! deal, and say, once again, that he's willing to walk away:

"We’re interested to pay for it at some level and beyond that level we’re not willing to pay for it. I know EXACTLY what I think Yahoo is worth and I won’t go a dime above."

The real tease, though was a glimmer of hope that this will be resolved soon:

We oughta know something – we oughta announce something in very short order.

All the Yahoo talk came in the Q/A, but unfortunately we were cut out of the call before the end. Ballmer said, though, that he was done talking about Yahoo!.

See Also: Ballmer to Microsofties: Yahoo Announcement in "Very Short Order"

Q/A Starting -- 9:41

Q: What is attractive about Yahoo!?

A: We are absolutely 100% determined to build the most interesting position in the world in online advertising media and the kind of social connected social media experience. The future of the way people consume information is going to change in the next 10 years dramatically. We are absolutely committed to being the leading player. We are not today the leading player. We've got very talented bright people. But there are some structural things in the industry that make it hard to make rapid progress.

But it takes a lot of things, for us to be there to be important not just in search but in this broader area. We are going to have as big an index as we're going to need to have in search, the basics. That's expensive and we're entirely committed to it. We need to innovate in quick ways.

We need to gain scale. The world is rooting for us. The world hopes that there's a very strong company that's not the number one guy. We're gong to work that strategy with Google, with Yahoo! or without Yahoo!. Why buy Yahoo? Accelerates scale. Gets us more advertisers, gets us search. Yahoo’s not a strategy , it’s a part of a strategy. We’re interested to pay for it at some level and beyond that level we’re not willing to pay for it. I know EXACTLY what I think Yahoo is worth and I won’t go a dime above.

Missed deadline but we’re in the process. I report nothing. I got nothing to say today. We’ve got basically the three big options in front of us. There’s the friendly deal, there’s an unfriendly deal, third path is simply to walk away. Given it’s just a part of a strategy – if neither of those look good, we walk away. It makes sense at the price we proposed and I think it’s a good deal for Yahoo shareholders. It’s a huge premium it’s one of the largest valuations.

We oughta know something – we oughta announce something in very short order.

There’s nothing definitive to say today. We have a great plan and strategy and we have a long way to go. We are not number one and number one is a lot bigger than us. There may not be many people here that remember when we were a distant number 2 before. You gotta be willing to look outside of the box and Yahoo is $44 billion outside of our box. If Yahoo doesn’t happen there’s a number of other things we’ll look at.

Q: XP extended beyond June 30?

A: All of our OEM's have the right to extend XP beyond June 30th. "Downgrade rights." That has been very misreported on. We haven't changed a darn thing. My comments didn’t help.

Q: Yahoo! and Google deal?

A: I don’t know what’s going on with Yahoo! and Google. When you’re the number 1 guy making a deal with the number 2 company is usually kind of tricky (antitrust).

Our connection to the call has been dropped, but we're pretty sure that most of the Yahoo! talk is out of the way.

Notes from the beginning of the call

9:06: Last quarter was an exciting quarter. I want to talk about what we accomplished. FY 08 we've got a LOT GOING ON.

9:08: Going over what happened in 1Q and what's coming for the year (IE 8, Mesh, etc.). No mention of Yahoo! yet.

9:09: Will deal with Yahoo! during Q/A.

9:10: CFO Chris Liddell: Last quarter for the first time we gave guidance for FY 09. Most people were interested in what we talked the least about. Twice the number of people that we had at the Web cast. The results were overshadowed by people's interest in what was going on there.

9:12: Fabulous quarter

9:14: Yahoo!: Markets hate uncertainty, is the transaction going to happen? Are we going to go into a proxy fight? Are we going to withdraw? A number of people might be selling their stock and looking to buy back in after things settle.

9:17: Has been a big year for acquisitions. We have taken the opportunity to invest. Even though we have a difficult macroeconomic environment, we always look far into the future. We will continue to look for opportunity to drive growth.

9:22: Added 10,00 sq feet in the last 18 months of office space. Still adding more.

9:25: Aggressively expanding internationally. 15% of revenue comes from emerging markets and it's growing by 30-40%/year.

9:26: SVP Human Resources, Lisa Brummel: You work for one of the greatest companies in the world.

9:30: Employee morale, career development is up according to internal polls.

9:32: (Still no substantial mention of Yahoo)

9:33: HR should be finishing up soon.

9:37: Getting rid of Polystyrene cups (hopefully they start talking about Yahoo soon).