[Eric]

I've often wondered when this type of talk would begin. I'm hoping Yahoo will stand firm on this, but M$ has a ton of money, and money speaks very loud words.

One of Microsoft's major problems is that MSN still lags behind Yahoo! and Google in search. ComScore puts Google's share just below 44%, Yahoo!'s share just below 29% and MSN's just below 13%. Moreover, MSN has been losing share. Combined, Yahoo! and MSN would have a share about equal to Google's.

Google Inc. (NASDAQ: GOOG) still trails Yahoo! Inc. (NASDAQ: YHOO) and Microsoft Corp. (NASDAQ: MSFT) in terms of total monthly page views, so the battle is not entirely over, but Google's tremendous revenue growth is based on its power to deliver a huge audience of targeted and relevant search results. Based on the current share of that market, it would seem improbable that Yahoo! or Microsoft could catch Google, even it they improve their search technology.

Microsoft has launched its new digital advertising solutions initiative and Yahoo! plans to upgrade its core search technology, but that project has been running late.

Microsoft has a number of reasons to want to see Google knocked down a notch. Google's distribution of everything from free spreadsheets to free small business services threatens to undermine part of the core revenue base at Microsoft. The launch of Microsoft Live Search is almost certainly aimed at blunting Google's progress.

For Microsoft, all of this may be too little to late. As for Yahoo!, it seems to fare worse in the Internet search and advertising market as each day passes.

There have been rumors for some time that to solve their mutual problems, Microsoft might buy Yahoo!. Whatever cultural issues existed that might block the move, valuation was always a problem. However, Yahoo! is down from a little under $44 earlier this year, to around $25 now. And, oddly enough, at $27.20, Microsoft is nearing its best price since late 2004.

Yahoo!'s market capitalization has fallen to $34.5 billion. The company has about $2.5 billion in cash and short-term securities and $750 million in debt. That brings the cost to acquire the company as low as $33 billion. Yahoo!'s twelve-month trailing revenue is almost $6 billion and cash flow from operating activities is approximately $1.7 billion. So, Microsoft would have to pay a little over five times revenues and twenty times cash flow.

Expensive. Maybe.

Read the rest...

[shavei7]

and considering that MS has a tendency to buy out their competitors...this whole thing about MS buying yahoo to save msn is a possibility

[rsxgamer]

Wouldn't be supprised at all!

[Ajay]

I don't think it is possible and I don't think Yahoo! would let them to

[shavei7]

anything's possible. Yahoo may refuse at first but i don't know how long they could hold out... assuming MS decides to take this action to save msn

[Evolution Graphics]

Bill Gates usually gets what he wants...

[Life Xpect]

Bill Gates usually gets what he wants...

But Yahoo is not Activision.. From whom microsoft snatched up the halo series, it won't be that easy ;)

[Ajay]

Originally Posted by Evolution Graphics

Bill Gates usually gets what he wants...

But, does he want Yahoo! ??

[shavei7]

Originally Posted by Ajay

But, does he want Yahoo! ??

that doesn't really matter here. we're just discussing angles/possibilities on what MS might do to save MSN...

[alex]

It's not really a matter of want. Google has a 44% search market share, Yahoo 32% and MSN 12%. Microsoft has spent close to one billion dollars and has not even come close to beating out Google, by acquiring Yahoo, it not only closes up the loop of competitors but will now be at par with Yahoo.

What will be interesting, a lot of money has been spent recently in branding the live.com project, whereas the question would be what does that mean if they bought yahoo? I can't imagine that MSN and Live would become Yahoo, however, I can't imagine that Microsoft would give up on the powerful brand name that is Yahoo and it makes no sense to keep both. It will be an interesting play.