The news at a glance

Yahoo-Microsoft: Let the haggling begin

Internet portal Yahoo this week told Microsoft that the software giant would have to increase its $41 billion takeover offer if it wanted a deal, said Jessica Mintz in the Associated Press. Yahoo’s rebuff followed Microsoft’s threat last week to launch a hostile bid at a lower price than it originally offered in February. In a letter to Microsoft CEO Steven Ballmer, Yahoo executives argued for a higher price, citing their company’s favorable financial forecasts and its “effort to become a one-stop shop for selling and distributing online display ads.”

Yahoo and Microsoft have been negotiating behind the scenes, said Rob Hof in BusinessWeek.com. But negotiations “haven’t gone the way Ballmer wants—or at least he sees it in Microsoft’s best interest to make it sound that way.” Despite “all the orchestrated drama,” though, “the deal will get done.” Yahoo has had no luck trying “to craft an alternative deal” with AOL, News Corp., or another major media player. With no credible options, Yahoo has little choice but to extract the best possible price from Microsoft.

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Telecom: Motorola makes peace with Icahn

Motorola this week agreed to install two allies of financier Carl Icahn on its board, said Jeffrey Bartash in MarketWatch.com. The move defuses “the threat of a proxy fight that could have distracted the wireless device maker’s management at a critical time.” Icahn has been agitating for improved performance at Motorola since early last year. He won a partial victory in late March, when Motorola announced it would spin off its mobile phone business to shareholders, while retaining the division that makes modems, cable-TV boxes, and communications devices.

Mortgage crisis: A lifeline for WaMu

Washington Mutual scored $5 billion in fresh capital this week, replenishing reserves depleted by the mortgage crisis, said Matthew Karnitschnig in The Wall Street Journal. “The injection of new capital,” from a consortium led by private-equity firm TPG, “marks a humbling hat-in-hand moment” for WaMu, which “parlayed the housing boom to a nationwide reputation and immense profits.” For private-equity shops such as TPG, the credit crisis “provides a rare opportunity to pick up once-thriving financial institutions on the cheap.”

Music retailing: MySpace gets into the act

Social networking site MySpace last week leaped into the music retailing game, forming a joint venture with three major record companies, said Jeff Leeds and Brad Stone in The New York Times. Universal, Sony BMG, and Warner Music will make their entire catalogues available for download on a revamped MySpace Music site later this year. “The deal highlights the music companies’ scramble to keep pace as consumers migrate” to digital downloads, a business dominated by Apple’s iTunes.

Health care: Novartis eyes Nestlé’s Alcon

Pharmaceutical powerhouse Novartis this week paid $11 billion to Nestlé for 25 percent of Alcon, the world’s biggest eye-care company, said Robert Daniel and Steve Goldstein in MarketWatch.com. Nestlé might eventually “shed its entire stake in the eye-care specialist for about $39 billion.” Alcon, which makes contact lens solution and other eye products, complements Novartis’ existing Ciba Vision eye-care business. For its part, Nestlé “said the goal of the deal was to cut its debt” and focus on its core food business.