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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: typo?
By Belard on 2/3/2008 12:09:18 AM , Rating: 0
Really? There was a point when Netscape OWNED the browser market. When IE came out, it was a distant last - based off of licenced code of Mosaic.

Then they included ver3 (which had some useful features tha t Netscape didnt have) with Win95OSR2 (1996), version 4 came with Windows98. In 1996, IE had 10% of the market. By 1998 with IE3, it quickly grew to 35%. 1999 = 50%! 2000 = 80%.. uh oh.

Its only since 2006 that IE market share has gone down... just now hitting below 80% (I use Opera 99% of the time now and have suggest that friends and clients do the same).

Microsoft buys an office suite, and in a few years they destoryed WordPerfect and Lotus 123.

If Microsoft wants to damage a NEW company, all they need to do is announce "We're coming out with a simular product as ABC" - so the industry/consumers say... oh, that means it will need to be M$ compatible and won't buy ABC's product. ABC goes out of business and sometimes, M$ never comes out with the product.


“Then they pop up and say ‘Hello, surprise! Give us your money or we will shut you down!' Screw them. Seriously, screw them. You can quote me on that.” -- Newegg Chief Legal Officer Lee Cheng referencing patent trolls

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