As it is being reported around the web today (CNN and The Sun ), Microsoft has made a $45 Billion (£22.4) bid for Yahoo. As Microsoft and Yahoo continue to fall behind Google in the online advertising arena Microsoft has decided to up the ante a bit by placing this bid for Yahoo. With estimates of the online advertising market increasing in value from $40 billion in 2007 to $80 billion by 2010, and with an overall trend of shifting applications to online, browser-based delivery, this is just further indication that Microsoft sees the direction of things to come.
It is being reported that Microsoft has offered $31 a share, a 62% premium from where Yahoo stock closed on Thursday. This comes shortly after Yahoo's announcement on Tuesday that they would be laying off 1,000 employees between now and mid-February. Despite meeting market expectations, a "disappointing" 2008 revenue forecast and increased market dominance by Google may lead to Yahoo deciding that the time to sell is now.
While I was a little surprised to see this offer finally materialize, the two companies have allegedly been in talks for quite some time, 18 months according to Steve Balmer. I'm personally more than a little torn by this turn of events. I've always enjoyed the "separation of powers" of having the three big companies (Microsoft, Yahoo and Google) separated. I suppose, however, if two of them were to have to combine forces, this is probably the scenario I'd dislike the least. Regardless of what happens now, Google knows that its market dominance is definitely troubling MS to a certain extent and with Yahoo up against the ropes right now I don't expect Google to sit back and coast. I'd be surprised if Google doesn't use this as an opportunity to announce a major new service, acquisition, or something similar in the next few weeks.
