CHRONOLOGY: Microsoft, Yahoo join forces in Web search

SAN FRANCISCO (Reuters) - The following is a timeline of key events in Microsoft Corp's pursuit of Yahoo Inc, stretching back more than two years, after the Web pioneer's financial results began weakening.

Early 2006 - Yahoo begins to report a string of weak quarterly results, reflecting competitive missteps by the company, market share gains by rival Google Inc, changes in the online advertising landscape and weakening spending in some ad segments.

Late 2006/early 2007 - Microsoft and Yahoo begin preliminary talks on various partnerships, including a merger.

2007

February - Yahoo, under the leadership of CEO Terry Semel, tells Microsoft it is not the right time to discuss a takeover, as the Yahoo board sees great potential in its new advertising technology and by making internal organizational changes.

June 12 - A strong minority of Yahoo shareholders challenges the company's direction, as Semel comes under fire. Nearly a third of votes cast at the company's annual shareholders' meeting oppose some of Yahoo's directors.

June 18 - Yahoo co-founder Jerry Yang takes over as chief executive as Semel steps aside. Semel remains Yahoo chairman.

2008

January 31 - Microsoft CEO Steve Ballmer makes a $44.6 billion, $31-per-share, cash-and-stock takeover offer to Yahoo's board. Semel resigns as chairman and is replaced by Roy Bostock.

February 1 - Microsoft makes the offer public. Its shares fall 6.6 percent to $30.45; Yahoo shares rise 48 percent to $28.38.

February 11 - Yahoo rejects the Microsoft offer as too low.

May 3 - After several earlier meetings, Yang meets Ballmer in Seattle. Microsoft verbally raises its offer to $33 a share, or $47.5 billion. Yahoo wants $37 per share, or about $5 billion more. Late in the day, Ballmer calls off the talks.

May 15 - Carl Icahn proposes a full dissident board slate for election at Yahoo's annual shareholder meeting in July. Icahn says he now holds a 4.3 percent stake in Yahoo, including 9.9 million shares and 49 million call options. Bostock replies to Icahn that "none of the alternatives we are considering would preclude us from entering into a transaction with Microsoft or any other party."

June 12 - Yahoo announces search advertising deal with Google for up to 10 years, and says talks with Microsoft have ended. Yahoo forecast an $800 million annual revenue opportunity from the Google deal, and a $250 million to $450 million boost to cash flow in the first 12 months. U.S. lawmakers are expected to scrutinize the deal on antitrust concerns.

July 14 - Yahoo rejects a "search only" deal jointly proposed by Microsoft and Icahn that would have entailed $1 billion in upfront fees for Microsoft to take over Yahoo's search assets, as well as $2.3 billion a year in guaranteed revenue for five years. Among other reasons for rejecting the deal, Yahoo disputes the $1.1 billion to $1.6 billion in annual cost savings projected for Yahoo in the proposal.

July 21 - Yahoo settles proxy contest with Icahn ahead of annual shareholder meeting. Icahn and two nominees from his alternative slate of director nominees will get seats on an expanded Yahoo board of directors.

November 5 - Google pulls out of search deal with Yahoo, citing regulatory objections.

November 17 - Yahoo says Yang will step down as CEO and return to Chief Yahoo role once the search for a new chief executive is completed.

2009

January 13 - Yahoo announces that Carol Bartz, the former CEO of Autodesk Inc <ADSK.O , is the new CEO. In her first earnings conference call with investors two weeks later, Bartz says she did not join Yahoo to sell the company, but also says "everything is on the table."

February 25 - Ballmer tell an analysts' meeting that he hopes to discuss a possible search partnership with Bartz, comments he will repeatedly make over the next few months.

May 27 - Bartz acknowledges that Yahoo has had discussions with Microsoft about a search partnership, but she says any deal will require a partner with "boatloads of money."

May 28 - Microsoft introduces Bing, a revamped version of its search engine backed by a massive marketing campaign. In the first month, Microsoft's U.S. search share increases to 8.4 percent from 8 percent, while Yahoo's share falls to 19.6 percent from 20.1 percent. Google's share stays at 65 percent.

July 29 - Microsoft and Yahoo announce a 10-year search partnership. [ID:nN29216653] Microsoft technology will power search on Yahoo sites, as well as the paid search ads that appear alongside search results. Microsoft will pay Yahoo 88 percent of the revenue generated by search ads on Yahoo sites for the first five years.

Yahoo's sales force to sell premium search ads for both companies, but Yahoo and Microsoft will keep their own sales teams for online display ads.

(Reporting by Alexei Oreskovic, editing by Matthew Lewis)