It seems that in the first half of every year there are some rumors that Microsoft might want to buy Yahoo. We heard it in 2006
and again in 2007
. Now that it's 2008 and Yahoo is looking incredibly vulnerable, having just announced weak earnings and plans to layoff 1000 employees
, and given their lack
of a serious strategy, Microsoft has finally decided to take the plunge
, making a somewhat unsolicited $44.6 billion bid for the company, representing a rather large 62% premium on the company's current valuation. This seems like a move both companies have
to make, as a hail mary shot at coming up with something that can actually compete with Google. Going it alone hasn't been working. Both companies have been trying all sorts of tricks to get back in the race, without much success. Both seem to be living off a legacy past, but are unable to excite many new users. Microsoft has shown some signs of moving up the chart, but Yahoo has been steadily listing in the other direction. Combining the two gives them scale, but it'll still take a lot of work and has a high likelihood of failure. Merging two huge companies like this is not an easy thing at all, and could very well be distracting enough to actually help Google gain even more ground. However, given how little either has been able to seriously dent Google's momentum, it seems that they need to give this a shot.