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Re: Microsoft to make bid for Yahoo
This is pretty big news:
Microsoft Offers $44.6B for Yahoo
By MICHAEL LIEDTKE, AP Business Writer
2 HOURS AGO
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, comes with Sunnyvale-based Yahoo in a vulnerable position.
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 sent Yahoo's share price up 60 percent in premarket trading, while Google fell 8 percent, weighted down by a fourth-quarter earnings report that missed Wall Street expectations.
In a letter to Yahoo's board of directors, Microsoft Chief Executive Steve Ballmer indicated the world's largest software maker is determined to bring the two companies together.
To underscore its resolve, Microsoft is offering a 62 percent premium to Yahoo's closing stock price Thursday.
Since reaching a 52-week high of $34.08 in October, Yahoo shares have fallen 46 percent. Yahoo climbed $10.40 a share, or 54 percent, to $29.58 in premarket trading. Microsoft shares fell $1.40, or 4.3 percent, to $31.20.
Ballmer revealed in the letter that Yahoo had rebuffed a previous overture a year ago, saying it had a turnaround in the works. But he pointedly noted Yahoo has instead deteriorated significantly.
"A year has gone by, and the competitive situation has not improved," Ballmer added.
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.
"Microsoft's consistent belief has been that the combination of Microsoft and Yahoo! clearly represents the best way to deliver maximum value to our respective shareholders, as well as create a more efficient and competitive company that would provide greater value and service to our customers," Ballmer wrote.
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."
Under terms of the proposed deal, Yahoo shareholders could choose to receive cash or Microsoft common shares, with the total purchase consisting of 50 percent cash and 50 percent stock.
Microsoft said it sees at least $1 billion in cost savings generated by the combination, and intends to offer significant retention packages to Yahoo engineers, key leaders and employees. The software giant said it believes the takeover would receive regulatory clearance and close in the second half of 2008.
Signaling Microsoft doesn't intend to take no for an answer, Ballmer wrote that the company "reserves the right to pursue all necessary steps to ensure that Yahoo's shareholders are provided with the opportunity to realize the value inherent in our proposal."
Google shares fell $46.55, or 8.3 percent, to $517.95 in premarket trading after the Mountain View-based company reported fourth-quarter earnings that missed analyst estimates.
While Yahoo is struggling, Microsoft is thriving. The Redmond, Wash.-based company last week forecast a rosy 2008 _ despite broader economic worries _ after it blew by Wall Street's expectations for a second consecutive quarter.
___
AP Business Writer Jennifer Malloy in New York contributed to this story
Re: Microsoft to make bid for Yahoo
Microsoft-Yahoo deal could reshape Internet
Changes potentially huge, but probably not in short term
By Brian Bernstein
The Associated Press
updated 7:24 p.m. ET, Fri., Feb. 1, 2008
BOSTON - A combination of Microsoft and Yahoo could reshape the Internet landscape for millions of Web users: Would the two companies join their online portals? Could they rethink the desktop computer to integrate Web content more directly?
The changes are potentially huge, but probably not in the short term.
Microsoft executives did not indicate Friday exactly what they would do with Yahoo's brand if their $45 billion bid is accepted. But analysts expect the combined companies to preserve many of their separate free services, like instant-messaging and e-mail programs.
(Msnbc.com is a Microsoft-NBC Universal joint venture.)
A more likely medium-term change is that some of Microsoft's Web content could fade away or get added to Yahoo, which has a vast collection of news and features aggregated from other providers.
Microsoft's Web properties, including its Yahoo-like MSN portal, aren't exactly slouches: They rank third, trailing only Yahoo and Google, in total visitors. But while Yahoo still is profitable, Microsoft's online services are a consistent money loser. The MSN search engine is a laggard, even with recent efforts to soup it up under Microsoft's online umbrella it calls "Live."
Having Yahoo in its tent could give Microsoft a rationalization for abandoning its unprofitable online elements.
"I think MSN folds into Yahoo," said Ian Campbell, CEO of Nucleus Research. "It would be foolish to keep that separate."
Perhaps the biggest change Microsoft and Yahoo could achieve together would be creating a better way to combine the Web and desktop computing '” not to mention cell phones, TVs, cars and any other gadgets that might someday plug into the Internet.
Consumers who access the Web on cell phones and handheld computers might be the first to find something new as a result of a Microsoft-Yahoo combination. Devices that run Microsoft's Windows Mobile operating system could be better integrated with Yahoo content and possibly yield new services, like social networking functions.
New ideas will be key to compete with Google's Web presence. After all, people don't "Microsoft" or "Yahoo" anything. Microsoft in particular tends to be tolerated more than loved. Google is also leading development of an alternative cell-phone operating system it calls Android.
Eventually, a teamed-up Yahoo and Microsoft might be able to rethink the PC desktop '” where Windows still runs 90 percent of the world's PCs '” so that Internet data such as stock prices, sports scores and weather are automatically baked in.
"We all have our home page because we have a concept of a home page," Campbell said. Before long, "we may not have a home page '” it might just be the background of my desktop. There's no reason why Microsoft can't push this another level."
Microsoft might also use Yahoo's online strengths to galvanize Web-based versions of some of its powerful desktop software applications, like Word and Excel.
Open-source rivals and Google are threatening to bite into Microsoft's lucrative Office software franchise with free versions of those kinds of "productivity" software. Microsoft is developing Web-based versions of its own, but slowly.
Now Yahoo could be the face through which Microsoft offers those online applications. Perhaps one day a Microsoft-fueled package of "Yahoo Apps" will go up against "Google Apps."
Even with these possibilities, analyst David Mitchell Smith, a vice president at Gartner Inc., believes the biggest change from a Microsoft-Yahoo deal probably will be the one most Web surfers don't notice. That will come as the companies try to broaden their ability to deliver ads all over the Internet, wherever it reaches.
It's necessary because being the most popular online destination '” as Yahoo already is '” is no longer enough. The explosion of blogs, video sites and other user-generated content has made our Internet travels more wide-ranging. As a result, the biggest Internet companies now need their ad networks to reach far beyond their home portals. Google has mastered that. Microsoft and Yahoo have not.
"I think that's really what it's all about," Smith said. "It's about advertising. It's about search."
© 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
URL: http://www.msnbc.msn.com/id/22958236/
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