April 30, 2008 11:54 AM PDT

Yahoo, Microsoft, and Google shares up

Posted by Dawn Kawamoto

As Microsoft prepares to kick the ball further in its Yahoo buyout play, possibly announcing a proxy fight as early as Wednesday afternoon, shares of both companies rose in late morning trading.

Microsoft investors apparently seem heartened by the prospect, with stock in the software giant rising 1.06 percent to $28.96 a share, over Tuesday's close.

That bodes well for Microsoft, which has suffered three straight days of declines after posting quarterly results on Thursday that showed revenue was weaker than some analysts' expectations.

Yahoo opened lower in early morning trading but was up slightly over Tuesday's close by the time the late morning rolled around. Shares of Yahoo were trading up a slight 0.44 percent to $27.48 per share.

Yahoo and Microsoft may also have gotten a bit of a lift from the broader markets, which were up in late morning trading. As they say, all boats rise with the tide (but, as we know, some more than others, depending on their baggage...)

Google, a Microsoft archrival and a quasi-white knight for Yahoo, was having a better run for the money in the morning, rising nearly 4 percent to $580.57 per share.

Part of that lift may have come from Google CEO Eric Schmidt, who was interviewed on CNBC on Wednesday morning during an investor conference in Los Angeles.

CNBC anchor Maria Bartiromo, in her interview with Schmidt, questioned him about the Microsoft-Yahoo bid and Google's advertising test with Yahoo, which recently concluded.

Bartiromo said: "What kind of combination would you like to see with Yahoo? What kind of a partnership would you like to see?"

Schmidt responded: "Oh, well, we actually enjoyed working with Yahoo. We also compete with them. They're a well run and, I think, impressive company. We've primarily been concerned about the possibility of a Microsoft acquisition of Yahoo because of Microsoft's history and because of the assets that Yahoo has are quite valuable. And we actually think that in the wrong hands, they could be used in the wrong way."

He then went on to cite the U.S. Department of Justice and its antitrust efforts against Microsoft more than 10 years ago, in which the agency and Microsoft entered into a "consent decree."

Schmidt also elaborated on the challenge a Microhoo merger would have on Google by noting:

"We read in the press that there's discussions and we'll see what they decide to do. If they go ahead and the merger's ultimately successful, it would be possible for Microsoft to integrate some of the properties and essentially eliminate consumer choice, particularly in electronic mail, instant messaging, the things where they have 80 or 90 percent market share, and that's a sweet spot for Microsoft in its ability to eliminate choice."

Do you think Schmidt was trying to send a not-so-subtle message to the DOJ? Hmmm...