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UPDATE 1-Microsoft sends out feelers to Facebook-WSJ

Wed May 7, 2008 1:35pm EDT

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(Adds Facebook no comment, background)

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SEATTLE, May 7 (Reuters) - Microsoft Corp (MSFT.O) gauged Facebook's interest in a possible acquisition after the software giant's failed takeover attempt of Yahoo Inc (YHOO.O), the Wall Street Journal reported on Wednesday.

The newspaper reported on its Web site that Microsoft's bankers put out subtle signals to Facebook, the social networking Web site, to see if it would be open to a full acquisition.

The talks were first reported by Web site All Things Digital, owned by Wall Street Journal publisher Dow Jones.

Facebook spokeswoman Brandee Barker declined to comment on the report. Microsoft officials were not immediately available for comment.

In October, Microsoft took a $240 million stake in Facebook, which valued the start-up at $15 billion. Citing an unnamed source, the report said there are no active discussions between the two companies.

The news came a few days after Microsoft dropped its unsolicited offer to buy Yahoo for $47.5 billion. The aim of that proposal was to build an online advertising powerhouse to rival Google Inc. (GOOG.O)

Facebook, founded in 2004 by Harvard student Mark Zuckerberg, has become one of the hottest properties on the Internet because of its rapid growth and the loyalty of its users. Facebook has more than 70 million active users.

In the past, Zuckerberg has resisted selling the entire company, opting to work toward an initial public offering.

Shares of Microsoft were up 5 cents at $29.75 in afternoon Nasdaq trade. (Reporting by Daisuke Wakabayashi and Anupreeta Das in San Francisco; editing by Jeffrey Benkoe and Dave Zimmerman)



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