Microsoft walks away from a proposed $50 billion buyout of Yahoo.

A summary of what's in the major U.S. newspapers.
May 4 2008 7:59 AM

No Deal

The LA Timesleads on Microsoft's surprise decision to ditch its proposed buyout of Yahoo; the move, which is expected to send the Internet giant's stock price tumbling, came after the companies' chiefs failed to agree on a price tag for the deal. The New York Times reports that health care is becoming prohibitively expensive even for people with health insurance, thanks to the softening economy and rising premiums and out-of-pocket expenses. The Washington Post leads on news that nearly eight years after al-Qaida almost sank the USS Cole, all those convicted of the attack have either escaped or been released from prison by Yemeni officials.

Microsoft took almost $50 billion off the table yesterday, breaking off merger talks with Yahoo after three months of high-level negotiations. "The economics demanded by Yahoo do not make sense for us," said Microsoft CEO Steve Ballmer. Over the past week, Microsoft had increased its buyout offer to $33 a share—a $5 billion increase, but still well short of Yahoo's $37-a-share asking price. The LAT notes that some analysts had predicted Microsoft would withdraw its offer as a "brass-knuckles bargaining tactic," hoping to drive down Yahoo stock and force the company to accept Microsoft's terms. The NYT looks at Yahoo's possible next steps: the need to placate investors might give fresh impetus to a search-advertising deal with Google, or to potential mergers with AOL or MySpace.

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The economic slowdown is taking its toll even on people with health insurance, reports the NYT: doctors, employers and union officials say that rising premiums, reduced coverage, and bigger deductibles are making it harder and harder for people to meet the costs of their medical treatment. In many cases, people are reportedly skipping routine medical checkups to save on co-payments; at worst, people are finding that their health insurance is adequate only as long as they don't actually require medical attention. "There's a real shift in the burden of health care to people who happen to be sick," says one analyst.

The Democratic presidential candidates continued to trade punches yesterday over the federal gasoline tax. Hillary Clinton renewed calls for a suspension of the tax, while Obama dismissed the plan as a "gimmick" and asked Democrats to disregard "phony ideas, calculated to win elections instead of actually solving problems." The NYT off-leads with an analysis arguing that the row speaks to the candidates' economic instincts: policy wonks say Clinton's ideas make better political than economic sense, while Obama gets lower marks for fiscal discipline.

Meanwhile, almost unnoticed, Barack Obama picked up another caucus victory, winning Guam by just seven votes. The next contest, of course, is Tuesday's double-whammy in Indiana and North Carolina: The NYT considers the significance of Indiana's splintered demographics, while the LAT looks to North Carolina, where more than a third of a million people have already cast early votes. It's looking increasingly likely, though, that this week's primaries won't be enough to knock either candidate out of the race; the LAT says both camps are poised to keep slugging until the end of the primary season.

Looking further ahead, the Post fronts a report on Barack Obama's attempts to redefine what it means to be a patriot: His argument that true patriotism lies not in flag pins but in responsible leadership might be a hard sell in the face of John McCain's heroic war record. The NYT picks up the theme, questioning Obama's conviction that he can rise above efforts to use patriotic symbols as a bludgeon: Like Michael Dukakis in 1988, the paper argues, Obama is new to the national scene and vulnerable to being redefined by Republican attacks.

From one horse race to another: Big Brown won the Kentucky Derby yesterday, but Eight Belles made the headlines, finishing second before collapsing with two broken ankles and having to be euthanized on the track. "Thoroughbred racing is in moral crisis, and everyone now knows it," says the Post, noting that horses are now so over-raced that an average of  two per day suffer career-ending injuries.

Shocks from poorly installed electrical wiring have killed at least a dozen American soldiers at military bases across Iraq in recent years; many more troops have been injured. The NYT reports that the incidents, which continued even after electricians and military officials raised safety concerns, have led to renewed questions about the oversight of contractors in the war zone.

DNA evidence isn't all it's cracked up to be, according to the LAT: While it's incredibly unlikely that any given person's DNA will coincidentally match samples from a crime scene, the odds of an incorrect match increase enormously when investigators check genetic patterns against the millions of records in the national DNA database. Unfortunately, that's seldom made clear to jurors, potentially resulting in unfair convictions in cases decided by DNA evidence.

Researchers have found a way to breed poison-free fugu blowfish, notes the NYT. That's good news for Japanese gourmands, who prize the fish as a delicacy—but bad news for fugu suppliers, who until now have been able to charge high prices for safely cleaned and prepared blowfish. "We won't approve it," huffs an official from Japan's National Fugu Association. "We're not engaging in this irrelevant discussion."

Ben Whitford writes for the Guardian, Mother Jones and Newsweek.

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