Gates stresses independent strategy

Bill Gates, chairman of Microsoft Corp., said his company will be able to build a competitive online business without bringing Yahoo Inc. under its fold.

"We didn't need to (take over Yahoo)," Gates told The Asahi Shimbun in an exclusive interview in Tokyo on Wednesday. "We thought the combination (of Microsoft and Yahoo) would accelerate some of our mutual goals."

Gates, 52, also said Microsoft does not plan to team up with other companies, such as Time Warner Inc.'s AOL unit and News Corp.

"At this point, we're doing what we always do--hiring great software people and working in a broad range of software areas. That's how we built our success as a company."

He would not discuss whether Microsoft is planning a new offer to acquire Yahoo.

Microsoft announced Saturday that it was withdrawing its unsolicited offer to take over Yahoo, a bid widely seen as part of its efforts to better compete with online search and advertising leader Google Inc.

Gates downplayed the competitive threat of Google, a fast-growing Silicon Valley powerhouse.

"The overlap between Google's product line and ours is very narrow. If you look at IBM or Oracle, you'd see a much bigger overlap in terms of things we do," he said.

"I'm not trying to minimize Google, but you should write down all our competitors and look at what they do and what we do, and not overemphasize one."

Microsoft, founded in 1975 by Gates and Paul Allen, dominates the personal computer software market.

In the year ended June 2007, the company reported a net profit of $14 billion, up about 12 percent from a year earlier, on sales of $51 billion, up about 15 percent.

The Windows operating systems and the Office applications software package--which includes the Word word processor and the Excel spreadsheets--both rake in more than $10 billion in operating profits.

Still, Microsoft is struggling to establish an equally strong presence in the expanding Internet market.

The company lost $700 million in its online operations on revenue of $2.4 billion in the year through June 2007.

U.S. market researcher e-Marketer Inc. projects that Google will account for more than 30 percent of the U.S. online advertising market in 2008.

Second-ranked Yahoo is expected to follow with a 14-percent share, while Microsoft is expected to trail with a share of less than 7 percent.

Google is expanding its online services, offering a word processor and spreadsheets for free as alternatives to Microsoft's desktop products.

Microsoft initially proposed $31 per Yahoo share when it made its offer public on Feb. 1. It sweetened its offer to $33 per share, but Yahoo's board demanded at least $37.

Some media reports said that Yahoo is prepared to sell its stocks if Microsoft makes another proposal.(IHT/Asahi: May 9,2008)