Microsoft, Yahoo re-enter merger talks

Merger talks that took place between Microsoft and Yahoo a year ago ended up failing, but according to the Wall Street Journal, the two companies are taking a new look at the possibility (subscription required) as a means to face competition from Google. The WSJ quotes “people familiar with the situation” as saying executives at Microsoft and Yahoo have entered early-stage discussions, and that they’re once again exploring the possibility of either a merger or “some kind of match-up that would pair their companies’ respective strengths.”

Management changes at the two firms reportedly make the merger more likely to happen than last year, as do delays Yahoo has suffered in implementing an online advertisement system with which it can catch up to Google. Last year, managers at Microsoft pushed for the firm to rely on in-house search and ad systems instead of buying Yahoo, but the WSJ says several of the architects behind those systems have now left the company. Microsoft CEO Steve Ballmer is also being pressured to make an acquisition in order to boost Microsoft’s online efforts, the WSJ adds.

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    • PRIME1
    • 14 years ago

    Hmmm….seems like just last week MS was crying about Google buying Double Click…. Oh the irony.

    • 5150
    • 14 years ago

    Let just do away with capitalism and let the government run teh Intrawebs.

    • maroon1
    • 14 years ago

    Why they don’t buy google ?

      • Nutmeg
      • 14 years ago

      They should, then they would OWN THE WORRRLLDDD!!! (of computers)

        • dmitriylm
        • 14 years ago

        Google is a hot company right now, making it an expensive purchase. With a little bit of ingenuity and forward thinking you can purchase a company like Yahoo for considerbaly less and turn it into the next Google. Or the next Enron.

      • vigilante
      • 14 years ago

      Google’s executives (and probably Apple too since they’re all cozy now) would fight it and MS would lose.

    • Jive
    • 14 years ago

    Good for them, the 20 percent profit i took in the stock this morning was even better for me. 😉

    I would have to agree with Gandhi, this merger wouldn’t work. It seems like more of a last resort thing, their Live! search didn’t bring in the numbers they wanted, so why not merge with the second biggest search engine instead?

    • Shinare
    • 14 years ago

    Its a sound business plan:

    I propose the following, we as a company will produce exciting and innovative blah blah blah blah, and in ten years we will be bought by Microsoft.”

    Instant Business Loan Approval. 🙂

    • Kopi
    • 14 years ago

    It’s all about money baby! If you’ve got the cash, you can buy anything under the sun. I just have to be very careful, keep my eyes open. You never know if M$ wants to BUY me!

    • packfan_dave
    • 14 years ago

    Merger? Don’t two companies have to be at least in the same neighborhood in terms of size for it to be a merger? MSFT has a market cap that’s over six times YHOO, and the ratio would be a lot higher if Microsoft’s stock weren’t severely undervalued (well, it’s that or most other computer industry stocks are overvalued). This would be a straightforward acquisition, not a merger.

      • Gandhi
      • 14 years ago

      There is no doubt who would be wearing the pants in this family!

    • JJCDAD
    • 14 years ago

    In some ways this makes sense to me. Today, when I think of MS, I think of a ‘technical’ company that makes software, but when I think of Yahoo I think of a more ‘social, open-source friendly, ONLINE’ company.

    The MSN/Hotmail users I’ve encountered have always been total noobs. It seems that those who use Yahoo(MyYahoo, Messenger, Search) seem to be those who at least have a clue and have been on the web for awhile. I know Google is where it’s at, and I use parts of it everyday (gmail, iGoogle, search). But I also still use Yahoo for a few things (HotJobs, Movie/TV schedules and reviews, Yahoo Mail).

    For me, MS and Yahoo are not really competitors. So for one to ‘acquire’ the resources of the other seems fine.

    Does this have any relation to the recent ‘merger’ of Yahoo! Messenger and MSN Live Messenger?

      • Smurfer2
      • 14 years ago

      Hey! I use hotmail. 🙁 I’m not a computer n00b…

        • JJCDAD
        • 14 years ago

        Sorry. I should watch my generalities. No offense intended.

          • Shinare
          • 14 years ago

          Yah… you should. I use Hotmail as well… for my spam mail account. I host my own personal email domain for my real address, heh.

          • BiffStroganoffsky
          • 14 years ago

          Don’t worry about it. He might claim to not be a computer n00b but he doesn’t seem to be much of an internet veteran as those people have thicker skin from numerous flame wars. Also, he would have gotten a gmail invite long ago. :p

    • Gandhi
    • 14 years ago

    Ha! Beat ya!

    Anyways, I don’t think this merger will work. If it goes through, I see another Time Warner – AOL type disaster.

      • Anomymous Gerbil
      • 14 years ago

      Almost no similarities.

        • Gandhi
        • 14 years ago

        Oh – so a large content company wanting to buy out a large user base is not similar enough for you? I would argue that this is even worse than AOL-Time Warner because the switching costs are so low – no binding contracts for users to adhere to!

          • dmitriylm
          • 14 years ago

          Yeah but the nature of the business is so different that your comparison is flawed. The performance of the merged companies cannot possibly be estimated or predetermined by looking over the AOL Time Warner merger.

            • Gandhi
            • 14 years ago

            The nature of the business is different, yes, but many of the issues and goals of the players involved are the same, hence the comparison. Yahoo is stuck in a rut when it comes to growth, Microsoft is desperate to become relevant in the web space, and the culture of the two companies is vastly different.

            The only thing different is that Wall Street analysts don’t see this current marer in positie light the way they initially welcomed the Time Warner AOL merger.

            • MadManOriginal
            • 14 years ago

            AOL-Time Warner was during the .com bubble when all things online were hothothot. People have gotten their senses back after getting burned now so it’s not comparable because of the different environment.

    • PRIME1
    • 14 years ago

    Microsoft should just go ahead and buy a state or a small country.

    It seems that most of Microsoft’s products (starting with DOS) was something they bought from another company.

    I would love to see a list of every company or product they have purchased since the beginning. I bet it’s a really long list.

      • Gandhi
      • 14 years ago

      I would love to see a list of something innovative that they came up with on their own, internally. I would bet it would be an incredibly short list.

      • Sargent Duck
      • 14 years ago

      A lot of companies do that. Just take any holding company (Hollinger with Conrad Black is the only one that comes to mind right off hand), that’s all they do is buy companies. Or Bombardier, they’ve bought a ton of rail and aircraft companies to better diversify.

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