Microsoft has announced that it is willing to buy Yahoo for $44.6 billion in cash and shares. The bid comes after Yahoo recently replaced fired CEO Terry Semel with the co-founder Jerry Yang, has announced layoffs and is seen as struggling with its stock price lagging.
Last year Yahoo, under Semel’s leadership, rejected a similar bid from Microsoft, but this time it seems it is going to “carefully and promptly” study the implications as the two companies combined may well be a better force to compete with Google.
As advertisers around the world are forecasted to double their spending of $40 billion last year on the Internet during the next three years as more people get their news and entertainment on the Web instead of newspapers, TV, radio and magazines; search engines are crucial tools because they are the central players in highly profitable ad networks.
Does it make sense for Microsoft to acquire Yahoo? With both teams blending Web applications and desktop applications it could prove very beneficial to have Microsoft and Yahoo on the same side. Yahoo may be struggling but it has solid search brand and a lot of content, while Microsoft has not been able to give their search engine ‘Live’ a much needed identity but is dominant in the software field.
Microsoft could then well provide the needed capital to create a combined search engine with Yahoo to take a stronger competitive position in the market and give Google the dominant search engine a run for their money!