Google CEO cautious on Microsoft-Yahoo deal

Echoing the Feb. 3 blog entry of David Drummond, Google senior VP of corporate development and chief legal officer, Schmidt expressed concern that the deal could have negative implications on the "openness" of the Internet.

"We would be concerned by any kind of acquisition of Yahoo by Microsoft," BBC News quoted Schmidt as saying. "We would hope that anything they did would be consistent with the openness of the Internet, but I doubt it would be." Schmidt cited Microsoft's history, claiming the software giant has done things that have been "difficult for everyone."

Microsoft in late January proposed a $44.6 billion bid for Yahoo, which the search company's board of directors rejected, saying it undervalues the company. Microsoft insisted the offer was fair and that it had no intention of raising the offer. The software firm was also reported to have hatched a strategy to oust Yahoo's board.

Yahoo, on the other hand, was reportedly looking to News Corp. to rescue it from Microsoft's hostile takeover bid, but News Corp. Chairman Rupert Murdoch said his company had no plans of engaging Microsoft in a bidding war.

Yahoo unveiled a three-year financial plan this week that projects revenue of $8.8 billion in 2010, doubling its current operating cash flow. The company is standing by its Q1 forecast of $1.28 billion to $1.38 billion in revenue, and a whole-year projection of $5.35 billion to $5.95 billion. Yahoo executives said these figures support their determination that Microsoft's bid offer undervalues the company.

Bear Stearns analyst Robert Peck last year estimated Yahoo's value at $53 billion.