Microsoft in $20 Billion Yahoo deal?

SOFTWARE giant Microsoft is in talks to acquire Yahoo’s online search business for $20 billion (£13 billion).

The proposal forms the centrepiece of a complex transaction that would see Microsoft support a new management team to take control of Yahoo. But there is no intention of Microsoft tabling another takeover bid for the web giant, after its aborted $47.5 billion offer this summer.

It is thought that Jonathan Miller, ex-chairman and chief executive of AOL, and Ross Levinsohn, a former president of Fox Interactive Media, have been lined up to lead the new management team. Senior directors at Microsoft and Yahoo are understood to have agreed the broad terms of a deal, but there is no guarantee that it will succeed.

- from Times Online

It’s time to finally end the Microsoft-Yahoo stalemate, and I’ve got a few suggestions.

I know Steve Ballmer said last week that acquisition talks are “over.”

Of course, he doesn’t want to buy the whole train wreck.

But Ballmer also reminded everyone at Microsoft’s annual shareholder meeting in Bellevue that he’s still interested in Yahoo’s search business.

He’ll get it eventually, but it’s like watching a bad mystery or Seattle building light rail: exciting at first, but once you figure out the ending, it starts putting you to sleep.

What’s the holdup, now that regulators pushed Google out of the picture?

One take is that Microsoft hasn’t been able to figure out whom to negotiate with in Sunnyvale. It went nowhere with the wishy-washy board of directors or the flip-flopping Chief Yahoo, Jerry Yang.

- from Seattle

Eric Schmidt is fond of saying it would take Google 300 years to achieve its goals. I always thought he must have been at least partly joking. The shelf life of Internet companies is short; it’s taken Yahoo and eBay little more than a decade to reach what appears to be their respective “best-if-used-by” dates.

And judging from the way investors have been treating Google’s stock, you’d think it was also on track to face an early downgrade from Internet giant to also-ran. After hitting an all-time high of $747.24 a share in November 2007, Google’s stock slid to as low as $247.30 a week ago — a 67-percent drop (the shares closed at $292.96 in a shortened trading day Friday). True, most stocks have suffered from widespread selling, but consider that rival Microsoft is down about 50 percent from its 2007 peak.

- from GigaOm

Meanwhile, Techcrunch says this is BS:

Let’s just compare this to the deal Microsoft previously offered to buy Yahoo’s search business outright.

That involved an $8 billion direct investment in Yahoo in exchange for 16% of the company, plus $1 billion in cash for the search business. And that was expected to generate an extra $1 billion in operating income.

So how does the new deal generate twice as much income going into an economic downturn? And why would Microsoft agree to anything other than complete ownership of Yahoo’s search business? And how does the search business go from being worth $1 billion earlier this year to $20 billion in two years?

Like I said, it doesn’t make much sense.

- from Techcrunch