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Yahoo Chairman Terry Semel resigns, Gates looks to solidify his online empire with the acquisition of Yahoo

Only days ago, the news broke that Yahoo was in troubled waters and sinking fast.  The Internet giant, which ranks number 2 in terms of search engine traffic and number 1 in terms of total traffic to properties, posted a declining net profit for the fourth straight quarter.  Worse yet, it announced that it would be cutting 1,000 jobs, or almost 7 percent of its workforce.  CEO Jerry Yang stated that the company was facing "strong headwinds" and had to be prepared to make big changes.

Now, an opportunity has come knocking on Yahoo's door, which holds the promise of transforming the online business world.  Microsoft Corp. made an unsolicited $44.6 billion bid for Yahoo and its holdings this morning.  The offer is one half in Microsoft common stock, and the other half in cash.

The move promises a sweet payoff for share holders, who would see their stocks soar 62% from Thursday levels, up to a $31 per share payout.

Microsoft Chief Executive Steve Ballmer was among Microsoft's big guns to be pushing the move.  He enthused that the move is the "next major milestone" for Microsoft.  He continued, "We are very, very confident this is the right path for Microsoft and for Yahoo."

Ballmer informed the media that Microsoft has been in talks with Yahoo, preparing the offer, for nearly 18 months now.  He gave Yahoo CEO Jerry Yang a personal call on Thursday night to announce the bid in person.

A Microsoft-Yahoo team would shake up the online community by creating a legitimate competitor to Google, which current stands far above the competition in terms of search engine Traffic.  Traffic research site comScore indicates that Yahoo has 22.9% of the search engine market and Microsoft owns a 9.8% share.  Together, their 32.7% share, would pose a challenge to Google's 58.4% share of the U.S. search engine market.

Microsoft revealed that it had first had broached the possibility to Yahoo executives a year ago, but was rebuffed by Yahoo's board of directors and CEO. With today's resignation of Semel, the balance of Yahoo's board could lead to a different outcome.  Semel was strongly opposed to the merger last year.

A year after Microsoft's offering, Yahoo is much worse for wear and promises to evaluate Microsoft's proposal "carefully and promptly."  As UBS analyst Benjamin Schachte puts it, "Last year, Yahoo told investors it needed more time to get on the right track.  But you only get a certain amount of time to turn things around."

Steve Ballmer stated, "We have great respect for Yahoo, and together we can offer an increasingly exciting set of solutions for consumers, publishers and advertisers while becoming better positioned to compete in the online services market."

Google spokesman Matt Furman declined to comment, stating, "It would be premature to comment at this point."

However, its safe to say that Google is not blind to the impact a Microsoft acquisition of Yahoo would make on its competitive prospects.  It looks like Google may have a real fight on its hands for the first time in years, and Microsoft may soon add a new piece to its ever-growing empire.

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RE: You can't stop the googlebot.
By Vanilla Thunder on 2/1/2008 3:46:12 PM , Rating: 5
What exactly is so great about Google?

The sad thing is, that's almost irrelevant. It's about everyone knowing your name. Much like alot of "uninformed" consumers refer to any mp3 player as an iPod, your average Joe knows that when he needs to search, he can just "google" it.


RE: You can't stop the googlebot.
By retrospooty on 2/1/2008 3:59:14 PM , Rating: 2
Agreed, I use google too, a great brand name at this point... But the above poster (Tamale) stated "(Piece of crap A + Piece of crap B) < Google".

Other than being a good search engine that came along at a good time and has a great brand name, what is so great about Google, and how is is so much better than an MS/Yahoo combo?

RE: You can't stop the googlebot.
By Vanilla Thunder on 2/1/2008 4:29:22 PM , Rating: 2
I'm not sure about that. However, I do know that regardless if this buyout happens or not, I'll still use Google, and I bet you will too. Maybe that's what's so great about Google.

Manilla Thunder

RE: You can't stop the googlebot.
By Tamale on 2/1/2008 5:46:53 PM , Rating: 2
Manilla Thunder? That a Freudian Slip hinting that you're interested in getting a macbook pro? hehe

RE: You can't stop the googlebot.
By Tamale on 2/1/2008 5:43:39 PM , Rating: 1
heh.. hilarious how my initial post got modded down but your post is up although we're arguing the same thing ;)

all i was trying to say is that google's name in search and online applications won't be slowed down at all by teaming up two lesser-known entities...

i've actually used all of the 'live' online applications by microsoft, and they're all quite nice in their own way, but the simple fact is that doesn't matter because the brand isn't as strong.

"Intel is investing heavily (think gazillions of dollars and bazillions of engineering man hours) in resources to create an Intel host controllers spec in order to speed time to market of the USB 3.0 technology." -- Intel blogger Nick Knupffer
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