Steve Ballmer doesn’t take no for an answer. Microsoft Corp’s chief executive officer lost $7 billion on the Xbox video-game console before turning a profit. He poured an estimated $7.5 billion over 2-1/2 years into an internet business that still trails Google Inc in ad sales by a 7-to-1 margin.

And he isn’t going to let a February 2007 rebuff by Yahoo! Inc’s board keep him from buying the company to catch up.
Ballmer, who a year ago hadn’t laid out more than $1.5 billion on an acquisition, upped the ante. Not only did he propose what would be the largest technology takeover, seven times bigger than Microsoft’s record, he also made the first unsolicited bid in company history. Ballmer gave Yahoo’s board less than a day’s notice before going public with his $44.6 billion offer for the No 2 seller of Internet advertising.

“ He’s absolutely relentless,” said John Connors, a Bellevue, Washington, venture capitalist who was Ballmer’s chief financial officer for five years. “He’s particularly relentless when it comes to getting Microsoft into a better position, and in competing with Google, it’s going to take a bold move.”
Microsoft, the biggest software maker, may pursue a hostile bid if the Yahoo board doesn’t give in this time. Microsoft had talks with Yahoo, based in Sunnyvale, California, starting in 2006.

Ballmer, 51, credits Microsoft’s successes to persistence and a willingness to make long-term bets, a strategy that sometimes infuriates investors. On a conference call with employees after announcing the offer February 1, Ballmer pledged the same dedication that Redmond, Washington-based Microsoft used in developing its Windows and Office programmes.

“ We keep at things,” he said, according to a transcript. “We don’t start and stop.” He declined to comment for this story.
Ballmer doesn’t delay when he decides on a purchase. Tellme Networks Inc CEO Mike McCue held meetings with Ballmer for two days before the Super Bowl professional football championship last year and figured his group would hear back after the game.

That Sunday morning, Ballmer, a math major at Harvard College in Cambridge, Massachusetts, called them back in for what he called “Math Camp,” helping him plug numbers into a spreadsheet to decide whether the combination would work. At one point Ballmer grew so excited he started gesturing wildly while holding an open can of soda, spraying McCue and his executives.

The enthusiasm won over McCue, a former rival of Ballmer’s at Netscape Communications Corp who spent years convinced Microsoft was the “evil empire.” Yahoo employees may have a similar conversion after “some initial trepidation,” he said.

Ballmer is also taking on Microsoft investors who complain that the Yahoo price will be too high and say it will be hard to integrate companies that have a duplicate set of almost every product in their internet divisions.

Microsoft shares had their biggest drop since April 2006, a 6.6% decline, on February 1 after the bid announcement. “Two out of three of these large acquisitions will fail, so the odds are poor,” said Michael Cusumano, a professor at the Massachusetts Institute of Technology’s Sloan School of Management in Cambridge who has written four books on Microsoft.

The chances are even worse for a hostile bid, he said. Yahoo customers and employees may defect.
Microsoft is playing catch-up. It doesn’t handle more than 14% of Web searches, virtually unchanged from 2004, according to Nielsen Online. Google, based in Mountain View, California, does 56%, reaping advertising revenue as a result.

Matt Rosoff, an analyst at Directions on Microsoft, a research firm in Kirkland, Washington, puts Ballmer’s internet spending at $7.5 billion in the past 2-1/2 years. Microsoft doesn’t disclose the data.

Lisa Brummel, a Ballmer deputy, knows his determination first-hand. Three years ago, she returned from vacation to find he had scheduled a meeting with her on a Thursday. By Wednesday night, he drove to her office to convince her to leave her job in the hardware unit for human resources, to shore up employee morale and compete for engineers with Google.

She turned him down four times; he spent three hours persuading her. He is using a similar style now, persistence and a willingness to shift strategy, she said. “Leaders often have a way of doing things, and they keep banging away with the same methods,” Brummel said. “It takes a lot of courage and insight for Steve to say we’ve never done anything like this before, but we’re going to do it, and we’re going to do it in the biggest way possible.”

“ What he’s committed to is winning,” said Nortel Networks Corp CEO Mike Zafirovski, who negotiated a deal with Ballmer in 2006 to jointly sell Internet telephone products.

If Microsoft buys Yahoo, Ballmer’s legacy will hinge on the deal’s success, MIT’s Cusumano said. “It’s a big gamble, and I’m surprised he took it,” he said. “This is obviously the biggest thing he’s ever done.”—