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."

On the telecom side, Verizon Communications Inc. reported solid first-quarter earnings on Monday, helped by strength in its wireless segment.

Elsewhere in tech, "Grand Theft Auto IV" made its long-awaited debut on Tuesday, as gamers lined up to get their hands on the title. The game follows Eastern European immigrant-turned-gangster Niko Bellic on crime sprees around a fictional Liberty City. UBS analyst Benjamin Schachter expects the GTA IV to sell as much as 8 million units this year. He called its positive reviews "unprecedented" and said it could be the highest-rated console game in history.

Wednesday marked the day the game's publisher, Take-Two Interactive Software Inc., previously said it was willing to start formal talks with potential buyers of the company. Larger rival Electronic Arts Inc. has launched $2 billion tender offer that expires later this month.

IN CASE YOU MISSED IT: The NYSE asked Virgin Mobile USA Inc. to explain an unusual surge in its stock price Wednesday. The U.S. wireless unit of Richard Branson's Virgin Group, which went public at $15 per share last October, told the exchange it does not comment on unusual market activity. The stock closed up 12 percent on Wednesday, but in intraday trading it was up as much as 39.6 percent.

Network equipment maker 3Com Corp., whose proposed $2.2 billion buyout fell apart earlier this year because of government concern over a Chinese company's role, named Robert Mao chief executive on Tuesday. Mao, a fluent Mandarin speaker, will be based in China, which 3Com sees as its biggest market.

COMING UP: A number of tech companies are scheduled to give their quarterly reports next week. Network equipment maker Cisco Systems Inc. is set to release its fiscal third-quarter results on Tuesday

Online travel company Orbitz Worldwide Inc. will release its first-quarter results on Wednesday, while competitor Priceline.com Inc. will report on Thursday.

Video game publisher Activision Inc. reports its fiscal fourth quarter on Thursday. Graphic chip maker Nvidia Corp. reports its fiscal first quarter that day, as well.

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Compiled by AP Business Writers Rachel Metz and Barbara Ortutay in New York.