Microsoft wants to purchase Yahoo

[Mr.Sam]

http://news.bbc.co.uk/1/hi/business/7222114.stm

Microsoft has offered to buy the search engine company Yahoo for $44.6bn (£22.4bn) in cash and shares. The offer, contained in a letter to Yahoo's board, is 62% above Yahoo's closing share price on Thursday.
Yahoo cut its revenue forecasts earlier this week and said it would have to spend an additional $300m this year trying to revive the company.
It has been struggling in recent years to compete with Google, which has also been a competitor to Microsoft.

See graph of Yahoo and Microsoft shares
In a conference call, Microsoft's Kevin Johnson said that the combination of the two companies would create an entity that could better compete with Google.
It is a shotgun marriage, but the person holding the shotgun is Google


Tim Weber, business editor, BBC News website



What's at stake, who will win?


"Today the market [for online search and advertising] is increasingly dominated by one player," he said.
Chairman quit
Yahoo confirmed that it has received an unsolicited offer and said that its board would evaluate the proposal, "carefully and promptly in the context of Yahoo's strategic plans and pursue the best course of action to maximize long-term value for shareholders."
If Yahoo accepted the offer, competition authorities both in the US and the European Union would be likely to investigate the tie-up.
Yahoo chief executive, Jerry Yang, announced on Tuesday that he intended to lay off 1,000 staff as part of a restructuring plan.
Terry Semel, who stepped down as chief executive last June, also quit as non-executive chairman on Thursday.
Microsoft said that Yahoo shareholders could choose to receive either cash or shares.
YAHOO'S FALLING PROFITS
Oct to Dec 2007 down 23%
July to Sept 2007 down 5%
April to June 2007 down 2%
Jan to March 2007 down 11%



Yahoo share price
Microsoft share price
Google share price


Yahoo shares have fallen 46% since reaching a year-high of $34.08 in October. They opened 51.2% higher.
Microsoft opened 4.3% lower while Google shares fell 6.8%.
"Ultimately this corporate marriage was forced by the rise of Google, which has grown into a serious competitor for both Microsoft as a software company and Yahoo as an internet portal," said Tim Weber, business editor of the BBC News website.
"It is a shotgun marriage, but the person holding the shotgun is Google."
'Exorbitant premium'
According to its letter to Yahoo, Microsoft attempted to enter talks about a deal a year ago, but was rebuffed because Yahoo was confident about the "potential upside" presented by the reorganisation and operational activities that were being put in place at the time.
"A year has gone by, and the competitive situation has not improved," Microsoft's letter said.
But there has been some concern about the price that Microsoft is offering.

HAVE YOUR SAY

This smacks of desperation from Microsoft who have consistently failed to achieve a meaningful online presence

Matt, UK
Send us your comments


"To me, the premium seems exorbitant, for what is a dwindling business," said Tim Smalls from the brokerage firm Execution LLC.
"I personally don't see how the synergies of Microsoft-Yahoo is going to take on Google."
Other analysts were more enthusiastic about the offer.
"It is a fantastic offer. It is game on," said Colin Gillis from Canaccord Adams.
"This consolidates the marketplace down to Google versus Microsoft. These two companies will be going head to head."

[--ss--]

Don't really see the point in yahoo when Google offers it all (except yahoo launch music).

[Mr.Sam]

Yahoo hasn't been doing good in recent months, if they join with microsoft it could help them both ahead of google.

"If Yahoo agrees to the deal with Microsoft, it will be a shotgun marriage, but it will be Google holding the shotgun. If Yahoo's management says "yes, I do", it will be an admission that its attempts to turn around the company have failed.
Yahoo shareholders, in turn, will not be able to believe their luck. Microsoft was probably the only company with pockets deep enough to bail them out.
For Microsoft, however, this is the deal that could break it.
Making the offer is an admission that Microsoft's management has been scared by the success of Google.
The bid is also an acknowledgement that its numerous attempts to become a dominant internet content provider have failed.
But to make it pay, Microsoft will have to demonstrate that the combined company can offer a superior business model."

Don't really see the point in yahoo when Google offers it all (except yahoo launch music).

[jesus]

Don't really see the point in yahoo when Google offers it all (except yahoo launch music).

agred, especially seeing as microsoft have a search engine already (windows live)

[Technologic]

Waste of money.
Yahoo is becoming more and more unpopular

[jesus]

Waste of money.
Yahoo is becoming more and more unpopular

i think that's why microsoft are buying it, to make it more popular and try and overtake google

[dannyisnotamazing]

Yahho Games / King.com is good.

[Moh]

I don't like Microsoft buying other companies, like when they bought bungie they only alowed Halo on Xbox. It was going to be on PS untill they bought it