Sunday, 19 July 2009

Microsoft + Yahoo...again?

(By Richard Holway 6.00pm 19th July 09) The Blogsphere (and a lot of serious newspapers) are full of stories this weekend that Microsoft and Yahoo are close to a deal - again. Looking at the various comments, it seems clear that nobody actually knows what is happening – just that the parties might be talking again. I would remind readers that rumours of a resurrection of this coupling seem to occur every few months!

The most ‘popular’ view seems to involve a ‘deal’ rather than any kind of ‘acquisition’ whereby Microsoft takes over Yahoo search with Yahoo handling online advertising revenues for the combined operations. This would involve Microsoft making an upfront payment of $3b plus sharing ad revenues in some way.

It’s all a far cry from the $47.5b that Microsoft offered for Yahoo back in Feb 08. (See my post Microsoft+Yahoo 2nd Feb 08) Oh how Yahoo must be kicking themselves for turning that one down!

As readers know, I’ve never supported that coupling. However, the current suggestions make good sense at a much more realistic price.

The world has moved on even further since Feb 08. Even then I said that Microsoft were fighting yesterday’s battles. Tomorrow’s battle is about who wins in the Cloud. Here Microsoft needs a compelling Cloud portal and I’ve suggested that FaceBook could be that – at least for consumers. (See My advice to Steve Ballmer 26th Oct 08) With a more realistic Facebook valuation now, Microsoft could well afford to do both and still have oddles left from the $47.5b they might have spent just 18 months ago.

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