IT’S BEEN nearly three weeks since Jerry Yang sent out the invitations and still nobody has replied. The Yahoo co-founder knows whom he doesn’t want to come to the party: Microsoft’s Steve Ballmer. Time is passing and Yang’s snacks are starting to curl.

At the start of the month, Microsoft announced a bid to acquire Yahoo for $44.6 billion (€30 billion). Not long ago (say 18 months) the bid would have ignited a bidding frenzy.

True, Yahoo is not what it once was, but it is still one of the most visited websites on the planet. Last month close to 114m people visited Yahoo, according to Nielsen Online.

Microsoft offered $31 a share, a 62% premium to Yahoo’s market price at the start of the month, but given Yahoo’s shares were going for $31 as recently as November, this looked like a starting bid, not the final offer.

Yahoo has known Microsoft was chasing for some time and has refused to talk. After the bid was made public, Yahoo dismissed it as insultingly low and started suggesting that others were interested in its hand. But nobody has seriously come forward with an alternative and, with Yahoo’s share price trading below the $31 offer, it looks as if Wall Street does not think anyone will.

Few media or tech companies could or would want to outgun Microsoft for this one. Ballmer can do this deal in cash. And the debt markets have turned against all those private-equity houses that could once have spiced this one up.

It is not as if Microsoft is getting things all its own way. The company’s shares have been hit hard by the offer, which does not seem to be sitting well with investors. Many of those investors are both Microsoft and Yahoo shareholders. It would seem Ballmer and Co are not making a compelling argument as to why they should spend over $44 billion on Yahoo.

It will be fascinating to see what happens if, instead of making a higher offer, Microsoft’s deal collapses. In bidding for Yahoo, Microsoft has finally conceded that it cannot out-Google Google.

It needs new ideas, new technology and a lot more online customers to bring the fight back to its arch enemy. Yahoo would deliver some of that, but it has not really done that good a job of keeping up with Google either. As Microsoft’s shareholders have made clear, there are many who doubt that combining two halves will make a whole.

For Yahoo, the end of the deal could be an even sorrier affair. Yahoo has lurched from one misstep to the next in recent years. Analysts say it is big on promises and low on delivery. Google has swept it aside in search and is now threatening Yahoo in display advertising, the one area where it still has a lead.

Yang’s share price is being supported by the bid and an expectation that Microsoft will eventually sweeten it. If Ballmer walks away, nobody is expecting Yahoo’s share price to soar.

If Yang doesn’t come up with a clear vision for Yahoo’s future soon, perhaps Yahoo won’t have one.

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