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July 7, 2008

Microsoft Buyout of Yahoo! Heating Up

This Yahoo! proxy fight is going to be a real mess now that Carl Icahn and Microsoft have both issued letters suggesting that Microsoft is ready to do a deal if a new board is elected.  No one knows whether that deal would be for Yahoo!'s search business or for the whole company.  It's no secret that the only component Microsoft really needs is search.  The rest of Yahoo! is fluff to Microsoft, even if it is the one of the most heavily trafficked sites on the web.  Yahoo! is definitely a company in decline in spite of its moves to open its platform.  The profit is in search, and even with a 21% market share Yahoo! doesn't make enough in comparison to Google.

The Yahoo! stockholders better hope that Microsoft buys the entire company if a new slate of directors is elected at the next board meeting.  There may not be enough business left in the other Yahoo! services to justify investing once search is gone.  Icahn may get his money out of the deal. Microsoft may buy the market share it can't seem to grow no matter how hard it tries.  Yahoo!, though, will be gone gone gone as a viable web business.  Say hello to AOL-land, Yahoo!.

Icahn's letter to Yahoo! stockholders is here and the subsequent Microsoft statement is here, both via the Wall Street Journal.  Fortune has a great article on why Microsoft will win Yahoo!'s search business.

July 7, 2008 | Permalink


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