People in Seattle used to throw fits about all the Californians coming here and mucking things up. Now it's going the other direction, judging...

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People in Seattle used to throw fits about all the Californians coming here and mucking things up.

Now it’s going the other direction, judging from the way Yahoo rejected Microsoft’s enormous buyout offer.

Even after Steve Ballmer threw another $5 billion in the pot, Yahoo demanded another $5 billion — bringing the total to more than $50 billion — to swallow its pride and mask the stench of Lake Washington.

Thank goodness the tide finally turned and Ballmer came to his senses.

Imagine what Microsoft could do just with that “extra” $5 billion. Ballmer could buy most of the Web startups in Seattle and Silicon Valley, plus a few biotechs and energy ventures for good measure.

Yahoo CEO Jerry Yang will now go down in history as the obstinate founder who blew a chance to milk the world’s richest software company at the peak of its midlife angst.

Unless he comes back to Redmond a year from now, asking to try again.

The deal always felt like Microsoft was one of those older guys at a car auction, bidding away the nest egg to buy a 1999 Corvette that needed a little work.

Both sides of this three-month drama seemed stuck in the late 1990s, back when blue-chip companies mortgaged their futures to buy groovy Web portals with lots of traffic. Clicks, eyeballs, search — there’s an endless river of opportunity beckoning online.

I wonder if the failed Yahoo bid will mark the end of the recent buyout binge. Will it pierce the second dot-com bubble and once again restore sanity to the valuation of tech companies?

Or will Microsoft turn around and spend $10 billion buying the rest of Facebook?

Yahoo’s desperate search for partners to fend off Microsoft revealed that media moguls were willing to barter marquee Web properties such as MySpace and AOL to improve their positions.

Maybe it was all just posturing, but the wheeling and dealing looked to me like the experienced players were trying to play their hands before this round of the game ends and the cards are shuffled again.

Will Ballmer use that insight to make another move? Has he realized that Microsoft probably has all the firepower it needs, and its 80,000 employees have better things to do than fret about complicated mergers pulling down their stock?

Or maybe that’s all just wishful thinking.

The way Ballmer’s rejection letter was worded, I wonder if the story really is over.

“I still believe even today that our offer remains the only alternative put forward that provides your stockholders full and fair value for their shares,” Ballmer wrote. “By failing to reach an agreement with us, you and your stockholders have left significant value on the table.”

Maybe he’s just changing tactics and expects Yahoo will eventually come crawling back to Redmond, with or without Jerry Yang.

Brier Dudley: 206-515-5687 or