Microsoft to buy Yahoo; Google surrenders

[The Ozzman]

Microsoft Offers $44.6B for Yahoo
By Michael Liedtke, AP Business Writer

Microsoft Makes Unexpected $44.6B Offer for Internet Icon Yahoo

SAN FRANCISCO (AP) -- Microsoft Corp. has pounced on slumping Internet icon Yahoo Inc. with an unsolicited takeover offer of $44.6 billion in its boldest bid yet to challenge Google Inc.'s dominance of the lucrative online search and advertising markets.

The surprise offer of $31 per share, made late Thursday and announced Friday, comes with Sunnyvale-based Yahoo in a vulnerable position.

In a statement Friday, Yahoo said it will "carefully and promptly" study Microsoft's bid.

With its profits steadily sliding, Yahoo's stock slipped to a four-year low earlier this week and a new management team has been trying to steer a turnaround but sees more turbulence through 2008.

The announcement sent Yahoo's share price up 60 percent in premarket trading, while Google fell 8 percent, weighted down by a fourth-quarter earnings report that missed Wall Street expectations.

In a letter to Yahoo's board of directors, Microsoft Chief Executive Steve Ballmer indicated the world's largest software maker is determined to bring the two companies together.

To underscore its resolve, Microsoft is offering a 62 percent premium to Yahoo's closing stock price Thursday.

Since reaching a 52-week high of $34.08 in October, Yahoo shares have fallen 46 percent. Yahoo climbed $10.40 a share, or 54 percent, to $29.58 in premarket trading. Microsoft shares fell $1.40, or 4.3 percent, to $31.20.

Ballmer revealed in the letter that Yahoo had rebuffed a previous overture a year ago, saying it had a turnaround in the works. But he pointedly noted Yahoo has instead deteriorated significantly.

"A year has gone by, and the competitive situation has not improved," Ballmer added.

Microsoft's previous offer was rebuffed by Terry Semel, who stepped aside last year as chief executive under shareholder pressure.

Microsoft sent its latest takeover offer to Yahoo late Thursday, shortly after Semel resigned as the company's chairman. The letter is addressed to Semel's successors, new Chairman Roy Bostock and the current CEO, co-founder Jerry Yang, who is one of Yahoo's largest shareholders.

"Microsoft's consistent belief has been that the combination of Microsoft and Yahoo! clearly represents the best way to deliver maximum value to our respective shareholders, as well as create a more efficient and competitive company that would provide greater value and service to our customers," Ballmer wrote.

In a prepared statement, Yahoo said its board "will evaluate this proposal carefully and promptly in the context of Yahoo's strategic plans and pursue the best course of action to maximize long-term value for shareholders."

Under terms of the proposed deal, Yahoo shareholders could choose to receive cash or Microsoft common shares, with the total purchase consisting of 50 percent cash and 50 percent stock.

Microsoft said it sees at least $1 billion in cost savings generated by the combination, and intends to offer significant retention packages to Yahoo engineers, key leaders and employees. The software giant said it believes the takeover would receive regulatory clearance and close in the second half of 2008.

Signaling Microsoft doesn't intend to take no for an answer, Ballmer wrote that the company "reserves the right to pursue all necessary steps to ensure that Yahoo's shareholders are provided with the opportunity to realize the value inherent in our proposal."

Google shares fell $46.55, or 8.3 percent, to $517.95 in premarket trading after the Mountain View-based company reported fourth-quarter earnings that missed analyst estimates.

While Yahoo is struggling, Microsoft is thriving. The Redmond, Wash.-based company last week forecast a rosy 2008 -- despite broader economic worries -- after it blew by Wall Street's expectations for a second consecutive quarter.

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[The Heartbreak Kid]

I always preferred Yahoo, but Google is just easier.

 

[BlackMetalWhiteGuy]

I don't even know what Yahoo! does or why anyone would want it. They have a search engine that I haven't used since I learned about Google about nine years ago, and Y! messenger which no one uses.

 

[The Ozzman]

Yahoo's stock price is up about 10 bucks in pre-market open trading.

 

[skeptik]

Yahoo mail is a-okay imo.

 

[The Ozzman]

Gmail is better though

 

[skeptik]

G-mail is 100000000x more susceptible to spam.

 

[The Ozzman]

Gmail seems to filter spam better from what I've seen.

 

[supseudonymous]

We've had this conversation before. Gmail is the best for simplicity and Fastmail is the best as far as features.

 

[A1a23]

I swear Microsoft is gonna take over the world.

 

[zabu of nΩd]

G-mail's spam filter is kickass. The interface is really slick, and loaded with features (not the least of which is Google Calendar). Gmail is definitely the way to go.

 

[skeptik]

All I know is that my Gmail gets infinity times the amount of spam that my yahoo email gets. It's gotten to the point where I can't even fucking use my gmail account any more because it's been eaten alive by spam. And I've NEVER used it to sign up for ANYTHING at all. I've never even posted it anywhere. So what the fuck? And this goes for two different Gmail accounts.

 

[CAIRATH]

Wait, you're talking spam that ends up in your inbox? My Gmail account gets a decent amount of spam (about 10-15 messages a day or so) but 99.9% of that automatically ends up in the spam box so you never have to deal with it. Ocasionally I open my spam box and quickly scan through it to see if it caught anything I actually wanted to receive, then select all and delete. Only very once in a while will I get a spam message that actually appears in my inbox among my normal e-mail.

 

[CAIRATH]

Also regarding the topic, I don't really think it will change anything. As far as I'm aware Yahoo doesn't offer any services that Google and Microsoft didn't have already, and its marketshare in the services that it does offer is way smaller compared to those of Google and MS. I can't really see this shifting the balance of power in any dramatic way.

 

[skeptik]

Nothing gets sent to my spam folder for Gmail for some reason. I've checked the settings a dozen times, and nothing would lead me to believe that it should be behaving in this way, but it is, so fuck Gmail.

 

[CAIRATH]

That is really weird. Yeah I can see how it seems useless to you then. I don't have that problem and I've been very happy with GMail. It certainly is way better than Hotmail. And I find some of the other Google services pretty useful as well (Google Calendar and Picasaweb particularly) so I would be using my Google account either way.

 

[Nikki]

I've been having problems with my google search engine, so lately I've been using yahoo's.

 

[Zephyrus]

I've been using Google for years. Hasn't failed me once.

 

[supseudonymous]

Check your prefrences: http://www.google.com/preferences?hl=en

If everything is set correctly then the problem is likely with your browser.

 

[Ender Rises]

G-mail's spam filter is kickass. The interface is really slick, and loaded with features (not the least of which is Google Calendar). Gmail is definitely the way to go.

I don't like Gmail's interface. I use it because it allows me to use Thunderbird, which owns. The spam filter is alright, I guess. I know I get a lot more spam on Yahoo. I also use Yahoo messenger, but I use Trillian, so again, it doesn't matter. Google's search engine is pretty reliable.