Microsoft going "independent" after withdrawing Yahoo bid

He said in Tokyo that the company put "a lot of effort" in the talks with Yahoo and has decided the two should pursue "independent paths."

Over the weekend, Microsoft withdrew its 3-month-old unsolicited bid for Yahoo after seeing the impasse with Yahoos board over a mutually acceptable sales price.

"Now at this point Microsoft is focused on its independent strategy," Gates told reporters at a news conference in Tokyo.

Microsoft Chief Executive Steve Ballmer had orally offered to pay US$33 per share, or US$47.5 billion, for Yahoo, up from an initial bid valued at US$44.6 billion, or US$31 per share. At the time the negotiations collapsed, the value of Microsoft’s original offer had fallen to US$42.3 billion, or $29.40 per share, because half the deal was supposed to be financed with Microsoft’s declining stock.

Yahoo’s board wanted US$37 per share - a price that the company’s stock hasn’t reached in more than two years.

Microsoft trails Google in the online search and advertising markets, and the bid for Yahoo was an attempt at turning that around.

But Gates said that Microsoft was determined to make "advances" in its own search offering and meetings were in the works in Seattle to hammer out more specific plans.

"We will make the advances that give people a great choice there," he said.

Microsoft’s intense pursuit of Yahoo was widely seen as an acknowledgment of weaknesses in Microsoft’s solo Web search and advertising strategy, and the software maker now needs to prove it can innovate without Yahoo as a partner.

Gates makes periodic trips to Asia, and he was in Japan two years ago. He said he met with business partners in Japan, which he sees as an important market. Talks covered digital broadcast software for Windows-based personal computers and giving free downloads of Microsoft software to Japanese students.

In South Korea, where he visited before arriving in Tokyo, Gates had said Tuesday he wasnt ruling out alternative partnerships after the failure to buy Yahoo.

Possibilities include large Internet companies such as Time Warner Inc.s AOL and News Corp.’s MySpace and promising startups such as Facebook Inc. and LinkedIn Corp.

Microsoft already owns a 1.6 percent stake in Facebook, the second-largest social network behind MySpace.