Google to Yahoo!’s Rescue in Microsoft Deal

Yahoo!’s in the tight spot right now and it is stalling in many people’s opinion, waiting for a significant other bidder, to form an alliance of its own choice. A source close to Yahoo’s strategy was quoted by Reuters as saying that the Sunnyvale-based company would consider a business alliance with Google, just to thwart the takeover.

Not only that, but the red phones have been ringing
between the two companies, with Google’s CEO Eric Schmidt reportedly calling his Yahoo! counterpart, Jerry Yang, offering his company’s help. There was nobody available for comment on the matter from either of the two Internet giants, but it’s clear why the Mountain View-based company would do such a thing. The statement of David Drummond, Senior Vice President, Corporate Development and Chief Legal Officer at Google, earlier was clearly denoting fear and worry. That and the opportunity to get even with Microsoft for opposing the DoubleClick acquisition as well.

Although Google could not possibly cook up a bid for Yahoo!, because antitrust regulators would not allow the possible deal to go through, the business coalition would prove in more ways than one the choice to pick ahead of the others. News Corp is also assumedly preparing to bid, but few analysts see that happening and going through. Of course, Yahoo! could also be trying to pull a fast one with these talks and waiting for Microsoft to increase their bid to a sum closer to what the board thinks it is worth.

An email sent on Friday by Jerry Yang to all his company’s employees wrote: "We want to emphasize that absolutely no decisions have been made – and, despite what some people have tried to suggest, there's certainly no integration process underway," as quoted by Reuters. Nevertheless, Google is one of the very few who can actually get involved in a bidding war with Microsoft, and that’s a fact, while the results of the talks between Yahoo! and Google are yet to be seen.

BREAKING: Microsoft to Buy Yahoo for $44.6 Billion

In its race to become the runner-up on the search engine and online advertising markets, Microsoft is about to give Google a little something to chew on. The Redmond company is looking to buy Yahoo for no less the $44.6 billion. Microsoft has just announced the proposed acquisition of Yahoo for $31 per share. According to current estimates, the transaction is valued at no less than $44.6 billion and Microsoft is to offer both cash and stock. Yahoo
has been increasingly losing its position on the search engine market, as well as its audience eroded by social networks.

The latest financial results posted by the Sunnyvale Internet giant feature a consistent loss, with profit dropping to $660 million for 2007, down from $751 million in 2006. Yahoo was even preparing to lay off a reported 1,000 workers of its 14,300 workforce, after the poor financial results of the past year. Microsoft's proposed acquisition offers shareholders a 62% premium to current trading price for Yahoo! The Redmond company has presented its proposition to Yahoo's Board of Directors.

"We have great respect for Yahoo!, and together we can offer an increasingly exciting set of solutions for consumers, publishers and advertisers while becoming better positioned to compete in the online services market," said Steve Ballmer, chief executive officer of Microsoft. "We believe our combination will deliver superior value to our respective shareholders and better choice and innovation to our customers and industry partners."

"Our lives, our businesses, and even our society have been progressively transformed by the Web, and Yahoo! has played a pioneering role by building compelling, high-scale services and infrastructure," said Ray Ozzie, chief software architect at Microsoft. "The combination of these two great teams would enable us to jointly deliver a broad range of new experiences to our customers that neither of us would have achieved on our own."

Yahoo has failed to officially respond or comment on the acquisition proposal from Microsoft. Still, it is clear that the Redmond company will not hesitate in the least to cough up no less than $44.6 billion for Yahoo. The aims is of course the online advertising market, which is estimated to double in the next couple of years, from $40 billion in 2007 to nearly $80 billion by 2010. Microsoft revealed that the move to buy Yahoo was made as a measure to counter Google and its increasing dominance over the online advertising market.

"The combined assets and strong services focus of these two companies will enable us to achieve scale economics while reaching R&D critical mass to deliver innovation breakthroughs," said Kevin Johnson, president of the Platforms & Services Division of Microsoft. "The industry will be well served by having more than one strong player, offering more value and real choice to advertisers, publishers and consumers."