Yahoo buy not a strategy in itself: Microsoft CEO

Microsoft Chief Executive Officer Steve Ballmer speaks during a luncheon and conference on technology and innovation in Madrid April 25, 2008.

MOSCOW (Reuters) - Microsoft Corp Chief Executive Steve Ballmer said on Friday that buying Yahoo was not a strategy in itself, and dropping the bid meant it now had $50 billion to spend on other acquisitions.

"Yahoo was never the strategy we were pursuing, it was a way to accelerate our online advertising business," he told a packed hall at a technology conference in Moscow.

"We will spend money on some acquisitions. You can do a whole lot of things with 50 billion dollars," he said.

Ballmer was responding to questions about what he planned to do with Microsoft's huge cash pile after it walked away from a proposal to buy Internet media company Yahoo for $47.5 billion, or $33 a share earlier this month. Yahoo had rebuffed the offer, saying it would only settle for $37 per share.

Microsoft's top executive was echoing a refrain heard from him in recent weeks: At a May 1 employee meeting, he said Yahoo was valuable as part of a strategy to beat Microsoft arch-rival Google, but there were limits on the price it would pay.

"Yahoo's not a strategy, it's a part of a strategy," Ballmer had said three weeks ago in Redmond, Washington.

"We're interested to pay for it (Yahoo) at some level and beyond that level we're not willing to pay for it."

Talks broke down May 3 and Microsoft said it had "moved on."

Early this week, the two companies said new talks were underway on a more limited deal but neither side disclosed the terms. A source familiar with the discussions said Microsoft had proposed buying Yahoo's search business and taking a stake in Yahoo after Yahoo sheds its substantial Asian assets.

In Israel this week, Ballmer said Microsoft was now not in talks to acquire Yahoo, but was looking at other types of deals with Yahoo, the world's No. 2 Web search service after Google.

The Internet start-ups sector, which has recently seen a new class of instant-messaging tools, is not being used to its full potential, Ballmer added.

"There are many businesses that are in some senses under-appreciated by the market," he said, noting particularly healthcare start-ups.

"There's an aging population -- it's one of the biggest-growing parts of the world economy."

(Additional reporting by Eric Auchard in New York; Editing by Jason Neely)