Business/E-Business
Commentary
2/1/2008
03:45 PM
Gayle Kesten
Gayle Kesten
Commentary
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Microsoft Makes Play For Yahoo

InformationWeek, The New York Times

Microsoft has made an unsolicited $44.6 billion bid to buy Yahoo, which earlier this week disclosed less-than-stellar financials.The possible takeover is being widely hailed as Redmond's boldest move yet to compete with Google in the online services market -- a market that has been growing in importance to business users who are opting to access the software they want over the Internet.

?The Windows experience increasingly needs to embrace the Internet,? said Microsoft CEO Steve Ballmer on a call with analysts.

In a letter to Yahoo's board, Ballmer outlined four major areas in which the acquisition makes sense, including "synergies related to scale economics of the advertising platform where today there is only one competitor at scale" and the ability to "drive innovation in emerging scenarios such as video, mobile services, online commerce, social media, and social platforms."

Earlier this week, Yahoo announced a 23 percent decline in its fourth-quarter profit, plus plans to lay off 1,000 employees. Microsoft's offer of $31 a share represents a 62 percent premium over Yahoo?s closing stock price of $19.18 on Thursday.

If this deal goes through -- and there are already rumblings of regulatory and other challenges -- it will have a huge effect on the online marketplace. With one fewer major Internet player, smaller companies could find themselves with a bit less leverage when building all kinds ofonline businesses. Or perhaps the Microsoft/Yahoo combo would offer real competition to Google's dominance, which could be good for customers -- especially small and midsize companies typically stuck using Google's automated online tools.

We won't know for sure until after the deal gets done, if it ever does. But in the meantime, stay tuned as bMighty -- and everyone else -- analyzes, dissects, predicts, theorizes, and pontificates about this incredibly important deal.InformationWeek, The New York Times

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