Microsof Yahoo!... soon on local theaters

[MeDiCo_BrUjO]

http://news.yahoo.com/s/ap/20080201/ap_on_hi_te/microsoft_yahoo

Microsoft offers $44.6B for Yahoo

By MICHAEL LIEDTKE, AP Business Writer

SAN FRANCISCO - Microsoft Corp. has pounced on slumping Internet icon Yahoo Inc. with an unsolicited takeover offer of $44.6 billion in its boldest bid yet to challenge Google Inc.'s dominance of the lucrative online search and advertising markets.

The surprise offer of $31 per share, made late Thursday and announced Friday, seizes on Yahoo's weakness while Microsoft tries to muscle up in a high-stakes battle with Google likely to define the technology landscape for years to come.

In a statement Friday, Yahoo said it will "carefully and promptly" study Microsoft's bid.

With its profits steadily sliding, Yahoo's stock slipped to a four-year low earlier this week and a new management team has been trying to steer a turnaround but sees more turbulence through 2008.

The announcement lifted Yahoo's share price by almost 50 percent in morning trading, while Google fell more than 8 percent, dragged down by a fourth-quarter earnings report that missed Wall Street expectations.

In conference call Friday morning, Microsoft Chief Executive Steve Ballmer indicated he won't take no for an answer after Yahoo rebuffed takeover overtures a year ago.

"This is a decision we have — and I have — thought long and hard about," Ballmer said. "We are confident it's the right path for Microsoft and Yahoo."

Besides the question of Yahoo's acceptance, Microsoft's bid also faces regulatory scrutiny in Washington and Europe. On Friday, the Justice Department said it is "interested" in reviewing antitrust issues. European Union officials declined to comment.

To underscore its resolve, Microsoft is offering a 62 percent premium to Yahoo's closing stock price Thursday. If the deal is consummated, it would be by far the largest acquisition in Microsoft's history, eclipsing last year's $6 billion purchase of online ad service aQuantive.

Since reaching a 52-week high of $34.08 in October, Yahoo shares have fallen 46 percent. Yahoo climbed $8.62 a share, or 45 percent, to $27.80 in afternoon trading. Microsoft shares fell $2.22, or 6.8 percent, to $30.38.

Microsoft publicly disclosed its cash-and-stock offer in hopes of rallying support from Yahoo's shareholders, making it more difficult for Yahoo's board to turn down the bid.

In a letter released Friday, Ballmer pointedly noted Yahoo's financial performance has deteriorated since Microsoft was spurned a year ago. At that time, Ballmer said he was told Yahoo believed it was better off on its own.

"A year has gone by, and the competitive situation has not improved," Ballmer wrote in his letter.

Microsoft's previous offer was rebuffed by Terry Semel, who stepped aside last year as chief executive under shareholder pressure.

Microsoft sent its latest takeover offer to Yahoo late Thursday, shortly after Semel resigned as the company's chairman. The letter is addressed to Semel's successors, new Chairman Roy Bostock and the current CEO, co-founder Jerry Yang, who is one of Yahoo's largest shareholders.

In a prepared statement, Yahoo said its board "will evaluate this 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."

Microsoft views Yahoo as its best chance to thwart Google, which has leveraged its leadership in Internet search and advertising to emerge as an increasingly serious threat to the world's largest software maker's persuasive influence on how people interact with computers.

Google already controls nearly 60 percent of the U.S. search market, and has been widening its lead, despite concerted efforts by both second-place Yahoo and third-place Microsoft. By combining, Microsoft and Yahoo would have a 33 percent share of the U.S. search market, according to the latest data from comScore Media Metrix.

By joining forces, Microsoft and Yahoo also would widen their narrowing advantage over Google in providing free e-mail accounts — a service that helps foster more loyalty with users and create more advertising opportunities.

Advertisers around the world are expected to double their spending on the Internet during the next three years as more people get their news and entertainment on the Web instead of television, radio, newspapers and magazine. The trend is expected to create an $80 billion online ad market in 2010, up from an estimated $40 billion last year.

Despite an aggressive push in recent years, Microsoft's online advertising expansion hasn't paid off. Last week, the Redmond, Wash.-based company reported a 79 percent jump in its overall profit, but its online division's loss widened to $245 million.

And Yahoo has been struggling to attract more advertising even though its Web site attracts one of the biggest audiences. The Sunnyvale-based company's profit has declined for five consecutive quarters, prompting plans to cut 1,000 jobs later this month, a 7 percent reduction of its 14,300-employee work force.

Besides helping to boost its online ad revenue, Microsoft believes it could mine more profit from Yahoo by jettisoning workers and eliminating overlapping operations.

Microsoft said it sees at least $1 billion in cost savings if it buys Yahoo. Microsoft executives deflected questions about how many jobs might be lost, but the company emphasized retention packages will be offered to Yahoo engineers and other key employees, including some executives.

The fate of Yahoo's brand also is unclear if Microsoft takes over. Both Ballmer and Kevin Johnson, president of Microsoft's platforms and services division, hailed Yahoo's strong brand value but didn't commit to keeping the name alive.

So, how is it going to be called now... Microsoft Yahootmail?

[disturbed1]

I think it's funny to see Microsoft blowing money on a dead end venture like Yahoo. Yahoo served its purpose during the dot com rally (1995-2000). I remember when their stock was trading over $400 a share at one time.

Yahoo is dieing a slow death, Microsoft will only push it over it's edge. I don't see where they'd actually acquire anything worth while from Yahoo. Well besides Launch and email subscribers? If they want to blow money on a dead company they should just buy AOL. That would at least be a bit wiser than buying Yahoo.

[guns1inger]

Does anyone still use Yahoo for anything ? I haven't used their search in 10 years because it is rubbish, Yahoo answers is full of crap, and yahoo video is, well, that same as everyone else's.

Edit | Damned typos

[tenders]

well i think Microsoft is just "trying to save thier bacon". vista sucks , xbox sucks , lawsuits are many , and who knows what else we don't know about


Yahoo is just another nail in thier coffin

[disturbed1]

xbox sucks

I thought the Xbox360 was doing pretty good.

NPD reporting consumers have spent nearly 45 percent of total industry figures on Xbox 360.
Xbox 360 sold 1.3 million consoles in December alone
In December, NPD stated that Sony sold 798,000 PS3 hardware units.
Since PS3’s launch in November 2006, Xbox 360 has outsold PS3 by nearly 2:1 on average, bringing a total U.S. Xbox 360 install base of 9.2 million consoles, compared to and installed base of 7.4 million Wii consoles and 3.3 million PS3 consoles.

^^ Looks like the PS3 is the one that sucks

Currently the Xbox360 is a cash cow. It's brought in close to 50% of entire video game revenue for 2007. Out of 6 systems (PS2,PS3,Wii,Gameboy,DS,XBOX360) that just damn impressive for one console to bring 45% of the total numbers.

[lordsmurf]

Does anyone still use Yahoo for anything ? I haven't used their search in 10 years because it is rubbish, Yahoo answers is full of crap, and yahoo video is, well, that same as everyone else's.
Edit | Damned typos

I use it for webmail. I find Gmail and Hotmail to both be crap.

Sometimes use it for movies information (often because movie.com is down when I want it).

Yahoo's search hasn't been helpful in probably 10 years now (late 90s).
It's "news" is a bunch of unverified crap usually, not worth reading.
Auctions are still popular in Asia. eBay isn't even a competitor overseas.
HotJobs is full of bullshit pyramid scheme listings.
I quit using it's Yellow Pages because they always seem wrong.
Not used their maps since Google Maps came out.

MS owning Yahoo sounds like a bad idea to me. MSN.com sucks worse than Yahoo does.

[yoda313]

I am a yahoo user and supporter. Unfortunately I don't like the idea of a msn.com/yahoo merger. IF They keep them seperate than I'm all for it.

By the way the 360 ROCKS!!!!

[MeDiCo_BrUjO]

Update:

http://biz.yahoo.com/rb/080203/yahoo_microsoft_google.html

Microsoft-Yahoo deal poses antitrust issues: Google
Sunday February 3, 3:37 pm ET

SAN FRANCISCO (Reuters) - Google Inc (NasdaqGS:GOOG - News) fired back on Sunday at Microsoft Corp's (NasdaqGS:MSFT - News) $44.6 billion bid to acquire Yahoo Inc (NasdaqGS:YHOO - News), accusing Microsoft of seeking to extend its computer software monopoly deeper into the Internet realm.

David Drummond, a Google senior vice president and its chief legal officer, said in a blog post that the combination of Microsoft and Yahoo could undermine the open competition that has fueled more than a decade of Web innovation.

"Between them, the two companies operate the two most heavily trafficked portals on the Internet," Drummond wrote in a blog post to be published at http://googleblog.blogspot.com.

"Could a combination of the two take advantage of a PC software monopoly to unfairly limit the ability of consumers to freely access competitors' email, IM, and Web-based services?" he asked rhetorically, noting that Microsoft has a history of using its monopoly positions to dominate newer, adjacent markets.

The Google executive called on policymakers around the world to challenge the merger. In making its case for the deal on Friday, Microsoft executives said Google -- not Microsoft -- was the one company antitrust regulators were likely to bar from buying Yahoo based on Google's dominance in Web search.