Hi-tech CEOs offer Yahoo and Microsoft merger advice

By Eric Auchard

CARLSBAD, California (Reuters) - Microsoft Corp (MSFT.O) and Yahoo Inc (YHOO.O) seem to hang out in all the same places but somehow keep missing each other.

That's turned speculation over what it will take to get the two of them together into something of a CEO parlour game.

Media magnate Rupert Murdoch said this week he is "mystified" the two have not come to terms. E-commerce mogul Barry Diller said Microsoft should never have fired a hostile shot at Yahoo if they didn't plan to stick it out.

Yahoo board member Bobby Kotick joked that he had tried to get top executives from Microsoft and Yahoo together to play Guitar Hero 4, the hit video game from the company he runs, Activision Inc (ATVI.O).

In separate appearances at the D: Conference this week, the top executives of Microsoft and Yahoo said no progress had been made on a merger, though they were discussing lesser deals.

The two had held abortive takeover talks over a three-month period that ended May 3, Yahoo Chairman Roy Bostock has said.

Microsoft walked away from a proposal to buy Yahoo for $47.5 billion (24 billion pounds), or $33 a share, after Yahoo rebuffed it, saying it wanted $37 a share. Then in mid-May, the companies said they had begun talks on an unspecified deal short of a merger.

On Wednesday, Yahoo's co-founder and chief executive, Jerry Yang, threw cold water on speculation that they might be edging back into merger discussions.