• Wall Street Journal (paid subscription required), Thursday, May 24, 2007 12:17 PM

Microsoft chief advertising strategist Yusuf Mehdi on Wednesday put the stop to rumors linking Microsoft to a potential Yahoo acquisition. Earlier this week, financial and Web industry analysts surmised that Microsoft would make a move for the Sunnyvale, Calif. Web giant following its $6 billion acquisition of the interactive ad holding firm aQuantive, in order to better compete with Google in online content and advertising services.

"We think we have all of the pieces to reach our target," Mehdi said, though he added that smaller acquisitions are a possibility, which would rule out Yahoo. The Web giant's current market valuation is $40 billion. "Yahoo has a great business. Kudos to them, but we're bigger globally. We have half a billion people," he said.

Mehdi believes that Microsoft is now positioned to better compete with Google in search. Over the last few years, Microsoft has steadily lost market share to the search leader, though Mehdi said time is on Microsoft's side. "I still don't think it's the end of inning one. Google is a good product and a good brand, and you can't just match that. You have to do something big and bold and different. Nobody's really done that yet," he said, adding that a bold change to MSN search is in the pipeline.

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