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Yahoo CEO Jerry Yang has a lot on his mind. First he has to deal with the threat of Microsoft taking over his own company and secondly he has to deal with painful inside reports that Google is uninterested in an advertising alliance with Yahoo.  (Source: New York Times)
Sources close to Google indicate Google will reject Yahoo

The Google-Yahoo-Microsoft triangle is turning out to be somewhat like Adam Sandler's infamous "Love Stinks" song from the film the Wedding Singer.  First Microsoft wanted Yahoo, but Yahoo's board didn't want Microsoft.  After the rejection, Yahoo expressed interested in a Google alliance, but sources close to Google say that the company isn't interested in being partners with Yahoo anymore.   Google just wants Microsoft and Yahoo to leave it and each other alone.

Microsoft is trying to force itself on Yahoo by bringing its bid directly to stockholders in an unsolicited buyout offer, in a hostile takeover attempt.  To beat off Microsoft's ardent advances, Yahoo's board hoped to establish a possible advertising alliance with rival Google.  However, inside sources now say that despite some minor initial interest, Google is unlikely to pursue a pact with Yahoo.

While Google refused to public comment on the issue, sources say that it is concerned that a possible pact would attract antitrust scrutiny in the U.S. and abroad, and thus its not interested anymore.  Another unsaid factor may be that Google does not want to associate itself with sinking Yahoo, which is laying off hundreds of workers, while promising desparately to enact "big changes."  In a way Google doesn't need an alliance with Yahoo to get its share of advertising -- its already getting it, piece by piece each month.

With the prospect of a Google deal quickly unravelling, Yahoo has to resort to desparate measures like the purchase of advertiser Maven to try to avoid the Microsoft buyout.  Veteran portfolio manager Bill Miller of Legg Mason Inc. thinks that it won't be enough and that Yahoo "is in a tough spot if it wishes to remain independent."  His team thinks that Microsoft will likely up its offer slightly, and the shareholders will override the board decision. 

Significant shareholders of Yahoo are also quoted by the Wall Street Journal as saying a deal with Microsoft was extremely likely, with one putting the probability at 95 percent.  As these are the people who will be deciding the fate of the offer, this is a promising sign for Microsoft.

Amidst all the fuss, Yahoo quietly began to send out its layoff notices to the 1,000 workers losing their jobs.  The layoffs were established before the Microsoft bid became public.


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RE: So again,
By robertgu2k on 2/14/2008 8:08:38 PM , Rating: 2
I think the problem here is that Microsoft's $44 billion bid pumped the sagging Yahoo stock up by sixty something %.

If Microsoft's bid goes away, Yahoo's stock will crash again and Murdoch's modest $10 billion bid will not be enough to provide a meaningful floor to the stock.

Plus with the slowing US and Global economy; revenue and profit prospects for Yahoo will be diminished. For Yahoo's shareholders and employees, I believe it's in their best interest to merge with Microsoft.

Also, being that Microsoft needs web talent and does not want more Yahoo talent moving over to Google; I would wager that when Microsoft merges with Yahoo, the layoffs would be kept to a minimal…probably mostly backoffice support staff. And probably considerably less layoffs than if Yahoo stayed independent; which would then mean that they would badly need to downsize to get falling profits up.


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