Microsoft has increased its pressure on Yahoo! to start negotiations over its proposed takeover bid. In a letter to Yahoo! management made public, Microsoft underlined the changes in market conditions over the last two months since it announced the bid. None of the alternative tie-ups mooted in the press for Yahoo! has resulted in an announced proposal, the economy has weakened substantially, rival companies continue to develop, Yahoo's search and page view rankings have fallen and investors have failed to boost the Yahoo share price after management unveiled new financial targets. Microsoft said that, given these developments, it makes all the more sense for the two to sit down to negotiate. If no agreement is reached in the next three weeks, Microsoft has threatened to go hostile, bypassing the management and taking the bid directly to Yahoo! shareholders. That includes the start of a proxy contest to elect an alternative slate of directors for the Yahoo! board. Microsoft hinted that this could lead to a lower bid, as the need for a takeover battle lowers its valuation of Yahoo!.
