"Shortgun marriage": Microsoft’s $44.6 billion bid for Yahoo

Microsoft, the biggest and the most valuable technology company, made a fierce attempt of $44.6 billion bid for Yahoo. Microsoft's $31 per share offer corresponded to a 62 % premium  to Yahoo closing price last Thursday. On Friday the value of cash-and-stock deal dropped $28.95/share, due to Microsoft's shares declined. Yahoo shares, in reverse, jumped on 48% to $28.38.

The bid witnesses in the most obvious and harmful way that Microsoft didn't take its online business in a right way. Its previous decision to move from its strongest point in desktop computer software toward video games and data-center software, mainly processed with in-house investment, persistence and stubbornness. Company stocked to this model for many years, focusing on Internet research and advertising, however, without any remarkable successes. In May 2007 Microsoft bought on-line advertisement agency aQuantive for $6 billion, a small acquisition that demonstrated the first switch to new philosophy. The main and the most important step Microsoft has to take - developing bigger online revenue to subsidize free services taken as granted on the Internet.

It seems that it would be hard time for Yahoo that would face intense pressure to accept the bid, taking in view the foggy forecasted Outlook for 2008, followed by the sharp stock prices drop to four-year level earlier last week. Some experts believe that China's leader Baidu.com, Inc. or Chinese conglomerate Alibaba.com with 40% owned by Yahoo might bid for Yahoo as well: and it seems that yahoo would preferred with one of those instead of capitulating in front of Microsoft. Meanwhile Microsoft believes its technological expertise combined with crucial tools of searching engine yahoo would provide content and service that would attract the consumers to its site. Microsoft officials believe that the combination of the efforts of two companies would allow Microsoft to reach a US online audience of 142 million comparable with 124 million for Google. 

Natalia, reporter of Ecommerce Journal