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Microsoft offers to buy Yahoo--again

In the world of Internet search there are three main players: Microsoft, Yahoo and Google. While Google excels, the other two members of the big three are seeing their market share drop and Yahoo is having serious financial woes.

According to MSNBC, Microsoft sees this as the perfect chance to buy the floundering Yahoo property and gain some ground on the 600-pound search gorilla Google. Microsoft made an offer to purchase Yahoo for $44.6 billion and according to some the purchase could be a boon for the entire technology market. The Microsoft offer raised Yahoo stock prices by 54%.

The Microsoft offer places a 62% premium on the Yahoo stock closing price from Tuesday and the 52 week high for Yahoo stock was $34.08 in October. MSNBC reports that Microsoft offered to buy Yahoo last year and CEO Ballmer sent a letter to the Yahoo board. The Yahoo board at the time declined the offer. Ballmer told MSNBC, “According to that letter, the principal reason for this view was the Yahoo board's confidence in the "potential upside" if management successfully executed on a reformulated strategy based on certain operational initiatives, such as Project Panama, and a significant organizational realignment.”

According to sources, shareholders of Yahoo could choose cash or stock in the form of Microsoft common shares. The total purchase of Yahoo would be made with 50% cash and 50% stock. Microsoft is reported to expect a $1 billion cost savings from the merger and says it will offer significant retention packages to key Yahoo employees, engineers and managers.

Yahoo is in the process of restructuring its online business and announced earlier this month that it would be making big changes to gain market share. Part of the big changes Yahoo made was to cut jobs in an effort to cut expenses.

DailyTech reported that rumors were circulating that Yahoo could potentially lay off as many as 2,000 workers -- a figure an insider denied saying the actual number of jobs likely to be lost was more in the hundreds. A few days after the company insider said job cuts in the hundreds, Yahoo cut 1,000 jobs and announced its profits had fell by 23%.

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am I the only one?
By DeepBlue1975 on 2/1/2008 11:33:51 AM , Rating: 0
Who thinks that Microsoft is spreading too widely?

I mean...

- Operating systems
- productivity applications...
- games
- input devices
- gaming consoles
- MSN / live! / search engine

What another market will microsoft be stepping into?
Maybe they buy AMD+ATi if it starts to crumble?
Coca cola company and come up with something like a windows compatible cyber soda?
Car maker?
The Prada brand to make the fashionable and programmable yet user friendly MS Shoes of the future?

If I were Bush I'd be affraid of MS, in any moment they're gonna buy out the White House and install "MS President 1.0" in it, which will show a WSOD (White Screen of Death, a special version of the BSOD for the White House) any time someone asks for a budget increase in any area :D

RE: am I the only one?
By TomZ on 2/1/2008 11:37:54 AM , Rating: 2
Microsoft is already operating in most/all of the businesses that Yahoo is in, so I don't think it is much of a "stretch" for them. And I also think that this acquisition/merger is necessary for them to be able to compete effectively with Google. Two big players in this space is better than one, right?

RE: am I the only one?
By omnicronx on 2/1/2008 11:58:42 AM , Rating: 2
One day when Google launches a Desktop OS, Microsoft will look back at this as a good decision. Microsoft is very afraid of Google and the power of the Internet, this move proves it.

RE: am I the only one?
By MrDiSante on 2/1/2008 12:35:57 PM , Rating: 2
No, as said above Microsoft is already in all of the markets Yahoo! is in - and a LOT more. What may not be a great thing is blowing that much cash. On the one hand if it works then Microsoft will have yet another marketall to themselves. If it doesn't then there goes like 3 years worth of profits a lot of wasted time and effort trying to swallow such a huge company, and potentially the loss of any competition in the search/whatnot market.

RE: am I the only one?
By Donkeyshins on 2/1/2008 2:06:36 PM , Rating: 2
MSN 1.0 shipped in 1995. That means they've been around almost as long as Yahoo! (1994 - incorporated in 1995) and longer than Google (1998).

"It seems as though my state-funded math degree has failed me. Let the lashings commence." -- DailyTech Editor-in-Chief Kristopher Kubicki
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