Tech Roundup: Microsoft-Yahoo saga heats up, Sun disappoints

On Friday afternoon, a posting on the New York Times' blog DealBook cited a person involved in the discussions as saying Microsoft and Yahoo are in active merger talks and that Microsoft has raised its bid "by several dollars."

Also Friday afternoon, the Wall Street Journal reported that talks between the Internet icon and the world's largest software company have intensified as they try to reach an amicable deal. The paper cited people familiar with the matter.

Microsoft's bid for the Internet icon initially valued at $31 per share is currently worth about $42.4 billion, or $29.48 per share, based on Microsoft's closing stock price Thursday. Yahoo has rejected the bid, saying it undervalues the company.

Earlier in the day, the newspaper had reported that Microsoft may be preparing to go straight to Yahoo's shareholders, perhaps as soon as that day.

The Journal also reported that, impressed by a two-week test completed last month, Yahoo could come to a long-term advertising partnership with Google Inc. within a week.

Also in the Internet sector, Internet conglomerate IAC/InterActiveCorp reported its first-quarter earnings fell but adjusted results met analysts expectations.

In an earnings conference call, IAC head Barry Diller said the company hopes to file with the Securities and Exchange Commission in May regarding its plan to split into five publicly traded companies by August.

Sun Microsystems Inc. shocked investors Thursday when it said it swung to a fiscal third-quarter loss, hurt by acquisition costs and weak sales to U.S. consumer-focused companies. Analysts had expected a profit, with Sun's worldwide sales reach making up for the U.S. slowdown. The company's shares tumbled nearly 23 percent Friday and hit a multiyear low.

BMO Capital Markets analyst Keith Bachman, who rates Sun "Market Perform," called the results disappointing "even against very low expectations."