Microsoft Makes $44.6B Bid for Yahoo

Posted on February 1, 2008

The big tech news of the day is Microsoft's $44.6 billion offer to buy Yahoo. The story has ignited a blogstorm as you might expect.

Yahoo has been trying a variety of things to get going over the past few years. None of them have worked especially well for the company. If you look at Yahoo's list of recent acquisitions you will see content companies, social media websites and software companies. Yahoo is still a very ambitious company but they lack a clear focus. They bought both Flickr and Rivals.com. Are they a search engine, a traditional media company or a social media website? Jeff Jarvis calls them the "last old media company." Part of the reason Yahoo seems to be flip flopping in its acquisition strategy is the complexity of creating an Internet business model that works. This is something Google has accomplished. Microsoft wants to take Google on and they see a Yahoo acquisition as the best way to do this. Whether or not Yahoo accepts the offer or not remains to be seen but the stock is really jumping on the news.

The New York Times Bits blog calls it an offer Yahoo can't refuse. Bits' posts points to a Henry Blodget spreadsheet that shows MICRO-HOO's combined balance sheet.

DealBook has posted a copy of Microsoft's letter to Yahoo. Microsoft's press release can be found here.

Ars Technica reports that the two companies combined would control "25 to 35 percent of the search market." It is worth noting that neither company has a blog-specific search engine. Perhaps the combined companies could then turn around and nab Technorati or launch one of their own to compete with Google Blog Search.

Don't get too excited about the prospect of a Microsoft-Yahoo. Forbes is reporting that Microsoft execs have said they may have to compete with other potential buyers to win Yahoo. The Forbes article mentions Ebay, News Corp, AT&T and Comcast as the other companies that might try to out bid for Yahoo.

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