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Microsoft is willing to lay down $50 billion for Yahoo Inc. say reports

The search and advertising industry could change drastically over the next year if Microsoft has its way with Yahoo. In the last several weeks, it was well publicized that Microsoft and Google went head on in a bidding war for Internet advertising giant DoubleClick. Eventually, Google won and settled with DoubleClick for roughly $3.1 billion -- a sum that had analysts questioning Microsoft's true motives.

At the time of the acquisition, Microsoft had roughly $25 billion of available cash in its bank; more than double that of Google's $11.9 billion. Observing these figures, it was odd to see Microsoft back out of a deal it could easily win. "The best side to be on in a bidding war is the losing side," said legendary Wall Street tycoon Warren Buffet. Buffet is implying that the loser in a bidding war has forced the winner to over-pay for something.

Today, Forbes is reporting that Microsoft is in negotiations with Yahoo for a possible acquisition that could be worth $50 billion. According to the report, Microsoft is feeling greater pressure to compete in the online advertising space. Just recently, Yahoo announced its acquisition of online advertising firm Right Media for $680 million. While this is far from Google's $3.1 billion expense on DoubleClick, it does indicate that Yahoo is already quite a force in online advertising.

Another sticking point for Microsoft is the fact that both Google and Yahoo are ahead of the game when it comes to search. Microsoft has been playing catch up to Google and Yahoo with MSN Search, but having Yahoo under its belt would surely set the company onto a different playing field altogether.

Despite an impending deal with Yahoo, Microsoft hasn’t taken its eyes completely off the Google – DoubleClick deal. Microsoft is loudly voicing its opinion against the deal and has asked regulators to carefully monitor the acquisition.

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By Legolias24 on 5/4/2007 11:56:06 AM , Rating: 1
While it is commonly reported that Microsoft has a pile of cash in the gotta wonder about the finances of being able to afford a deal like this. I sure hope they (Microsoft) do their homework on a deal like this because that's a helluvalot of cash to fork over. They're not going to have much if any money left over for emergency situations (although I'm sure they'd probably have no issue in getting a "loan" so to speak).

I'm only making the comment about having money left over for emergencies because I've seen a lot of postings on topics related to the 360 or PS3, that talk about Microsoft being able to afford year over year losses in their Gaming division because of the reserve cash that they have. But with a deal like this, they better have some really emergency funds tucked away some where in the event any of their divisions starts seeing lots of "red"!

By darkpaw on 5/4/2007 12:03:15 PM , Rating: 4
They do have a lot of cash, but any deal would likely be a cash/stock mix so its not like they'd be cleaning out their piggy banks.

That said, sure the gaming division is a loser in general. However, I think the figure was given as $1B lost in total over the entire xbox generation to buy a roughly 25% marketshare. $1B to MS is little more then money found under couch cushions and they did achieve remarkable results in marketshare gain considering the competition.

By Tilmitt on 5/6/2007 5:56:57 PM , Rating: 2
Marketshare above profit was the rallying call of the dot com bubble...

"If a man really wants to make a million dollars, the best way would be to start his own religion." -- Scientology founder L. Ron. Hubbard
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