Microsoft Acquiring Yahoo? What this means to YOU and ME.

Unless you have been hiding in a cave, you should know that Microsoft is trying to acquire Yahoo and all the dramas that went along with it (i.e. Yahoo declining the offer and Mircosoft turn “hostile”, Yahoo looking for deals from private equities and other media companies like News Corp., Google bringing up the whole anti-trust thing again in revenge for when Microsoft protested against Google’s acquistion of Double Click…)

Since opinions, speculations, & suggestions are ALL OVER the internet and paper about this ordeal, I thought I would chim in and give my 2 cents.

Is this a surpise?

Hardly, it has been widely speculated that Microsoft is looking to acquire Yahoo since 4th Quarter last year. In fact, in Merrill Lynch’s “Top 10 Internet Themes for 1H’08″ report, it has been mentioned and speculated. Seriously, for Microsoft to even stand a chance in competing with Google, this seems like one of their very few options.

How would this end up?

Hard to say. Jerry Yang (Co-founder and CEO of Yahoo) seems to really dislike the idea - in particularly he felt that Yahoo was “blindsided” by Microsoft. He’s looking for ALL other alternatives to avoid being hostilely tookover - including (rumors about) conversations with a New York based private equity firm and couple Valley based one. Google is also interested, but I am not sure if they have the financial ability to do that alone (without PE funding). Its been reported that Jerry has been trying to strike some deals too with Rupert Murdoch, but again, News Corp won’t be able to do it without PE funding.

I personally feel that Microsoft’s effort is likely to fall through… I’ve dumped all my Microsoft stocks and Yahoo stocks (yay baby, up 48% last Friday). If you own one of these two stocks, be prepared to be GLUED to your computer in the next 3-4 days. I recommend you subscribe to the RSS feed of Silicon Vally Insider.

If Microsoft successfully acquire Yahoo, what does it mean to YOU?

So lets say this deal goes through, how will it affect the internet landscape? I would like to quote Adwords guru Perry Marshall here, “2 kids each with an IQ of 75 is not going to outsmart another kid with a 140 IQ”. - and I agree wholeheartedly.

There are certainly things that Microsoft does better and some that Yahoo does better, but the integration will be difficult technically. Plus, what Google has an advantage over the 2 others is its ability to MONETIZE traffic - which is the weakest area of BOTH Yahoo and Microsoft.

All in all, this shall be an interesting 3-4 days ahead of us. =)

Disclaimer: The writer owns stocks of Yahoo, Google, and Microsoft.

Technorati Tags: Yahoo, Microsoft, News Corps, Google, search engine,

Posted on Sunday, February 3rd, 2008 at 11:07 pm