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
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%.