Microsoft WILL pay up for Yahoo!

February 11th, 2008 | Category: Deals, Forecasts

Yahoo!’s (NASDAQ: YHOO) board of directors officially rejected Microsoft”s (NASDAQ: MSFT) already generous tender of $44.6 billion for the company. Not a surprise, and Microsoft will actually pay up for the deal to occur. Microsoft has to and they are now by a barrel. Let’s explore why.

Microsoft spent by $6 billion final year to acquire the best company in the on-line digital advertising/marketing space, aQuantive. To monetize that acquisition and effectively, or least try to compete with Google (NASDAQ: GOOG), Microsoft needs a much bigger platform

in the search engine sector. No question, even with all of its might and make name recognition, the best Microsoft could muster is a 3.9% market share for its MSN versus Google’s massive 76%. Yahoo! has 15% share and combined with MSN, the share rises to just under 20%. Still a small player versus Google but a viable one.

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Original post by Georges Yared

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