The people say that it's unclear what final approach Microsoft will take, but that discussions between the two companies have been stymied by a stark divide on price. Microsoft has said privately in recent days that it's willing to offer as much as $32 or $33 a share, well above the $29.12-a-share value of its original cash-and-stock offer as of Tuesday's market close, these people say. But major Yahoo shareholders have signaled they want in the range of $35 to $37 a share, with Yahoo's management and board similarly shooting for an offer in the upper $30s, they add.

SAP AG (NYSE: SAP), together with Microsoft Corp., today announced a significant milestone in its mission to help banks establish a service-oriented architecture (SOA) for their business operations. SAP and Microsoft, along with other founding members, have created the Banking Industry Architecture Network (BIAN). The goal of BIAN is to help banks ease the transition to an SOA by gathering together a community of industry-leading players and global banks that will openly share domain and technical expertise to apply SOA principles and methodologies. In employing these principles, banks globally will be able to better respond to changing customer needs and reduce risk and cost of re-engineering legacy systems toward a more flexible operational environment.

Based on the foundation of the Industry Value Network (IVN) for Banks created by SAP, 17 founding members have launched BIAN: AXON, Callata˙ & Wouters, Credit Suisse, Deutsche Bank, Finanz IT, ifb Group, ING, Microsoft, Deutsche Postbank, SAP, Standard Bank, Steria, SunGard, S.W.I.F.T, Syskoplan, Temenos and Zürcher Kantonalbank. The announcement was made at a signing ceremony, where members gathered for the official launch of the BIAN association.

Microsoft has decided not to release Windows XP Service Pack (SP) 3 to Windows Update and the Microsoft Download Center as planned on April 29. The reason? A last-minute compatibility issue with a Microsoft application — Microsoft Dynamics Retail Management System (RMS).

Microsoft Corp. and Beijing Komoxo Mobile Software Inc. today announced a patent licensing agreement on text-input technologies for mobile devices. The licensed patents allow Komoxo to integrate Microsoft’s statistical language modeling methods into its next-generation text-input engine for reduced keypad and touch-screen devices, and deliver new mobile innovations to consumers around the world.

Through the agreement, Microsoft’s patented technology would be used in Komoxo’s innovative text-input solution to improve appropriate word recommendations and selections during texting and to enhance spell-checking features for mobile devices. For example, many mobile devices combine text and numeric input keys onto one keypad. The technology being licensed by Komoxo will enable devices using the technology to recognize and recommend words faster and with more accuracy based on individual user experience. This new-generation text-input solution will significantly improve the text-input consumer experience, especially for one- hand text input in mobile scenarios on growing popular “reduced” keypad and touch-screen mobile devices.

This patent licensing agreement is the first of its kind between Microsoft and a China-based company and a testament to both the quality of Microsoft’s patent portfolio and its commitment to working with China-based companies. The agreement will accelerate research and development, foster greater technology collaboration, and enhance Komoxo’s value proposition to its customers based in China and around the world.

Microsoft Corp. today announced that it has completed settlement of its tender offer for Fast Search & Transfer ASA, a leading provider of enterprise search solutions. Microsoft’s plans to acquire FAST were originally announced Jan. 8, 2008. FAST will operate as a Microsoft subsidiary, with a dedicated enterprise search research and development center in Oslo, Norway, and offices throughout the world.

“With our companies combined, we’ll be uniquely able to offer customers what they’ve been telling us they want most — a strategy for meeting everything from their basic to most complex enterprise search needs,” said Jeff Teper, corporate vice president for the Office Business Platform at Microsoft. “I’m incredibly excited to have the talented team from FAST joining us.”

John Markus Lervik will transition from his role as FAST CEO to become Microsoft’s corporate vice president of Enterprise Search, reporting to Teper. Under Lervik’s leadership, the group’s charter will include the development of a comprehensive portfolio of enterprise search offerings, including Microsoft Search Server 2008 Express, search for Microsoft Office SharePoint Server 2007 and FAST ESP, and future delivery of a single enterprise search platform.

“From the moment I started talking to Microsoft about the prospect of bringing our talent and technology together, I realized what a powerful impact we could have on the way companies use search to drive new revenue streams and improve productivity,” Lervik said. “Together we’ll deliver better technologies that make enterprise search a ubiquitous tool, central to how people find and use information.”

Existing FAST customers will continue to be served by their FAST sales, services and support teams, while the combined product lineup immediately extends customer choice. Further innovation across the entire enterprise search portfolio — on Microsoft Windows as well as on Linux and UNIX — will help ensure that Microsoft and FAST customers receive best-in-class offerings to meet their current and future needs.

Microsoft Corp. today announced third-quarter revenue, operating income and diluted earnings per share of $14.45 billion, $4.41 billion and $0.47, respectively. Operating income and earnings per share results included a charge of $1.42 billion, or $0.15 per share, for the European Commission fine. Income taxes were reduced by $0.15 per share for the resolution of a tax audit.

“Our third-quarter results demonstrate the benefit of our diversified business model,” said Chris Liddell, chief financial officer of Microsoft. “Our broad span across geographies, product categories and customer segments is a tremendous asset and supports our outlook for double-digit revenue, operating income and earnings per share growth for this fiscal year and also for fiscal year 2009.”

Entertainment and Devices revenue for the quarter grew 68% over the comparable period last year driven by robust demand for Xbox 360 consoles. Cumulative console sales surpassed 19 million during the quarter, up 74% from a year ago. Server and Tools revenue growth of 18% added to its string of consecutive double-digit revenue growth quarters, which now stands at 23.

“The breadth of our product offerings and our ability to provide solutions across a range of customer and partner needs paid off again this quarter. The third quarter also kicked off the largest enterprise platform launch in our company history, which highlights Windows Server 2008, SQL Server 2008 and Visual Studio 2008,” said Kevin Turner, chief operating officer of Microsoft. “These new products strengthen our ability to help business customers and partners save money, optimize their people, processes and technology, and position IT as a strategic asset for their businesses.”

Business Outlook

Microsoft management offers the following guidance for the quarter ending June 30, 2008:

• Revenue is expected to be in the range of $15.5 billion to $15.8 billion.

• Operating income is expected to be in the range of $5.8 billion to $6.2 billion.

• Diluted earnings per share are expected to be in the range of $0.45 to $0.48.

Management offers the following preliminary guidance for the full fiscal year ending June 30, 2009:

• Revenue is expected to be in the range of $66.9 billion to $68.0 billion.

• Operating income is expected to be in the range of $26.7 billion to $27.4 billion.

• Diluted earnings per share are expected to be in the range of $2.13 to $2.19.

Additional details on fiscal year 2009 guidance will be provided in the fourth-quarter earnings announcement and during the company’s Financial Analyst Meeting on July 24.

As of recently, the Smart Watches with MSN Direct have sold out and are no longer for sale. While we continue to move forward with MSN Direct and seeking out new opportunities for devices that would benefit from the MSN Direct service, we, along with our watch partners, do not have immediate plans to create a new version of the Smart Watch, as we are focused on other areas of our business.

Imagine all your devices—PCs, and soon Macs and mobile phones—working together to give you anywhere access to the information you care about.

With Live Mesh, you can spend less time managing devices and data and more time connecting with family and friends or collaborating with colleagues.

Microsoft Corp. today announced the general availability of Microsoft Dynamics CRM Online, an on-demand customer relationship management service hosted and managed by Microsoft. The new Internet service delivers a full suite of marketing, sales and service capabilities through a Web browser or directly into Microsoft Office and Outlook.

It provides “instant-on” access to businesses that want a full-featured CRM solution with no IT infrastructure investment or setup required. Businesses can learn more about Microsoft’s strategy for delivering next-generation CRM solutions from a new webcast being launched today at http://crmchoice.com, featuring Microsoft CEO Steve Ballmer and Martha Rogers from the Peppers and Rogers Group.

“At Microsoft, we’re revolutionizing how companies deploy marketing, sales and service solutions to users within their organization,” said Brad Wilson, general manager of Microsoft Dynamics CRM at Microsoft. “Microsoft Dynamics CRM delivers the power of choice to customers, with a familiar and productive user experience and a multitenant platform that enables fast on-premise implementations or ‘instant-on’ deployments over the Internet.”

Microsoft Dynamics CRM Online reinforces Microsoft’s broad software plus services strategy for delivering integrated business solutions over the Internet, and it is a part of Microsoft’s multibillion-dollar investment in global datacenters. In addition to full access through a zero-footprint browser client, the new service delivers marketing, sales and service information within a native Microsoft Office experience, integrated with the desktop tools that employees already use every day, enabling businesses to ramp up end-user adoption and productivity rapidly.

Microsoft Dynamics CRM Online is initially packaged in two service offerings:

• Microsoft Dynamics CRM Online Professional delivers a full suite of CRM capabilities with extensive configurability and extensibility options. Businesses get 5 GB of data storage, 100 configurable workflows and 100 custom entities. The Professional edition is priced at $44 per user per month, with an introductory offer of $39 per user, per month.

• Microsoft Dynamics CRM Online Professional Plus delivers all the capabilities of the Professional version plus offline data synchronization with expanded data storage, workflow and customization options that give businesses 20 GB of data storage, 200 configurable workflows and 200 custom entities. The Professional Plus edition is priced at $59 per user per month.

Today we are happy to announce that Windows XP Service Pack 3 (SP3) has released to manufacturing (RTM). Windows XP SP3 bits are now working their way through our manufacturing channels to be available to OEM and Enterprise customers.

Microsoft Corp. has completed its acquisition of Danger, Inc., the company announced today. Danger’s expertise in building great, intuitive client software for mobile handsets connected to powerful hosted back-end services fosters rich consumer experiences in communication, media sharing, entertainment and personalization. The combined force of Danger and Microsoft strengthens the company’s ability to provide innovative mobile experiences to more consumers.

Danger will become a part of the new Premium Mobile Experiences (PMX) team, a group within the Mobile Communications Business (MCB) of the Entertainment and Devices Division at Microsoft. The PMX team focuses on consumer-facing mobile projects and is led by Roz Ho, corporate vice president of Premium Mobile Experiences, reporting to Andy Lees, senior vice president of the MCB. Danger co-founders Matt Hershenson and Joe Britt will join the new organization, reporting directly to Ho.

This week at the NAB Show 2008, Microsoft Corp. and Ascent Media Group announced a new strategic alliance that will result in new solutions that will automate and streamline the supply chain for the media and entertainment industry and help them transition the digital age.

As part of the alliance, Microsoft will work with partners to create a new solution that Ascent Media Group will use to manage its business processes as well as offer new services to media and entertainment companies. Composed of new media and entertainment functionality built on the Microsoft Dynamics AX platform, the new solution will integrate and streamline media production processes. Ascent will offer a hosted version of this solution along with integrated managed services to film studios, broadcasters, global media enterprises and advertising agencies, all of which are demanding capabilities that allow the immediate distribution of digital content to outlets around the world.

The new Microsoft Dynamics AX functions are tailored to address typical business processes in media and entertainment organizations including work order management, library management, resource scheduling, element tracking, digital ordering and distribution, among others. Ascent Media Group is uniquely positioned to be the preferred digital supply chain provider for Microsoft solutions for media companies, with its expertise in asset management, metadata tracking, billing and notifications and strong media industry relationships.

Yahoo Inc. is surrendering some of its advertising space to Internet search leader Google Inc. in a test that appears designed to frustrate Yahoo's unsolicited suitor, Microsoft Corp.

The experiment announced Wednesday will allow Google to place ads tied to about 3 percent of the queries made in the United States through Yahoo's search engine -- the Internet's second largest after Google's.

Microsoft Corp. (NASDAQ: MSFT) today issued the following statement from Brad Smith, Microsoft’s General Counsel, related to an announcement today by Yahoo! Inc. (NASDAQ: YHOO):

“Any definitive agreement between Yahoo! and Google would consolidate over 90% of the search advertising market in Google’s hands. This would make the market far less competitive, in sharp contrast to our own proposal to acquire Yahoo! We will assess closely all of our options. Our proposal remains the only alternative put forward that offers Yahoo! shareholders full and fair value for their shares, gives every shareholder a vote on the future of the company, and enhances choice for content creators, advertisers, and consumers.”

Today, at the RoboBusiness Conference and Exposition in Pittsburgh, Microsoft Corp. released the first community technology preview (CTP) of Microsoft Robotics Developer Studio 2008, the new version of its robotics programming platform. Microsoft Robotics Developer Studio 2008 contains improvements in its runtime performance, distributed computational capabilities and tools.

Scheduled for release later this year, the first preview of the product is now available for evaluation and testing by developers, customers and partners. Microsoft Robotics Developer Studio 2008 is a Windows-based environment that can be used by academic, hobbyist and commercial developers for the creation of a variety of robotic programs and testing scenarios.

Today at RSA Conference 2008, Microsoft Corp. announced the availability of the public beta release of its next-generation Microsoft Forefront security solution, currently code-named “Stirling.” Microsoft Forefront “Stirling” is an integrated security system that is designed to deliver comprehensive, coordinated protection, making it easy to control, access and manage security capabilities across an organization’s IT infrastructure.

Customers can begin evaluating Forefront “Stirling” today by downloading it from http://www.microsoft.com/stirling or by getting a copy at Microsoft’s booth at RSA Conference 2008. Forefront “Stirling” is scheduled for release to market in the first half of 2009.

Forefront “Stirling” includes a central management console for security configuration and enterprise-wide visibility, combined with the next-generation Forefront products that span the client, server and network edge. They include Forefront Client Security, Forefront Security for Exchange Server, Forefront Security for SharePoint and the next generation of Microsoft Internet Security and Acceleration Server (ISA Server), Forefront Threat Management Gateway.