What happens to the Yahoo and Microsoft deal?

Talks between Microsoft and Yahoo continue as the market closes and the business week comes to an end. Every signal is that the two sides are close to finalizing a deal, somewhere between $33 and $37/share. But are we going to see a deal at all?

If there isn't a friendly deal, is Microsoft going officially for the hostile take over? The market supports Yahoo's claim for "more money" as the stock price rose as much as 11% May 2, 2008 and closed at $28.68.

Analysts are pretty much guessing about a deal to be wrapped up over the weekend and announced on Monday. Their estimate for a cash/stock mix is in the $35 range. Microsoft has signaled that they’ll go as high as $33 this week.

The main reason Microsoft has changed strategies seems to be the willingness of Yahoo to do a search outsourcing deal with Google in the event Microsoft walks away or goes hostile.

The threat is very real, and some experts say that regulatory approval of such a deal would not be as difficult as some have speculated.

Techcrunch: Microsoft and Yahoo Merger

Techcrunch: "Big mergers tend to fail more often than not, especially when companies are trying to combine operations as opposed to adding on new standalone capabilities. One of Microsoft’s biggest mergers was Great Plains Software, which was a success specifically because Microsoft pretty much left it alone for a couple years and let it operate independently.

Helge: Let it operate independently is not an option with Yahoo!

That is not an option with Yahoo. the merger is a collision waiting to happen. Integration is going to be rough and will slow down the merged company. Nobody believes that a combined Microsoft-Yahoo will be a nimbler competitor than either bureaucratic organization is today on its own.

Helge: MSN might suffer more than Yahoo in the beginning.

Not that any of this matters from Microsoft’s perspective. The logic of the deal is to gain scale as an advertising platform and as a Web publisher. the two go hand in hand. The more Web pages and traffic you have, the more ad inventory you have to sell. Everyone is focused on search, because that is where Google is so dominant today.

Helge: Inventory to sell.

But remember, while search ads make up about 40 percent of Internet advertising revenues, display ads still make up about a third. And that is where Yahoo is strongest. Microsoft needs to bulk up on display ad inventory before Google’s DoubleClick deal goes through. If it can fix search, that would just be a bonus.

Helge: Display ads into context!

A combined Microsoft-Yahoo will help it compete against Google in display advertising, which is still an open game..."

» Microsoft’s $240 million says Facebook no fad after all | Between the Lines | ZDNet.com

» Microsoft’s $240 million says Facebook no fad after all | Between the Lines | ZDNet.com: "Updated: Guess Facebook isn’t a fad after all. And Microsoft CEO Steve Ballmer put up $240 million to prove it. In a statement, the two parties outlined Microsoft’s investment. The software giant will invest $240 million in Facebook and become the exclusive third party advertising platform for the social network.

The deal values Facebook at $15 billion. Facebook said it won’t detail investors beyond Microsoft at this point. Under the agreement, Microsoft “will be the exclusive third-party advertising platform partner for Facebook, and will begin to sell advertising for Facebook internationally in addition to the United States.”

Facebook says the deal enables it “to take our Microsoft partnership to the next level.” “It’s consistent with our focus on innovation and growth,” said Owen Van Natta, vice president of operations and chief revenue officer at Facebook, on a conference call.

Microsoft says the deal “is a great win for not only for our two companies, but also our collective users and advertisers.” “The opportunity to further collaborate as advertising partners is a big reason we have decided to take an equity stake, and is a strong statement of our confidence in the long-term economics of this partnership,” said Kevin Johnson, president of the Platforms & Services Division at Microsoft in a statement.

“This signals a big vote of confidence from Microsoft’s largest advertising platform,” said Johnson on the conference call. He added that Facebook increases the inventory on Microsoft’s ad platform. “Our ad platform will get stronger and stronger.”

Chatter about the deal picked up this afternoon as reports emerged that Microsoft was the winner of the Facebook sweepstakes. Google didn’t have any direct comments about Microsoft’s Facebook investment.

Microsoft

Microsoft Chief Executive Steve Ballmer said on Thursday the company aims to pursue an independent path, focusing on up to 20 smaller acquisitions of $50 million to $1 billion each annually rather than mega-deals.

Cisco and Apple

When Apple launched the iPhone there was an issue boiling up around the tradmark of iPhone owned by Cisco. Recent news say, "Cisco’s real goal is establishing interoperability for their products with Apple’s new phone. This could get interesting."

We will see. Apple didn't show up in Barcelona. The big news was that they weren't there. Lots of new phones were launched. But there was a long shadow from the media show of January 2007. Nokia and Microsoft both approached the enterprise markets with their models and OS.

Expensive iPhone

Steve Ballmer laughs off the iPhone as the "most expensive" in the marketplace. Microsoft doesn't want to give credit to the attention that the iPhone presentation attracted. I think, "We have to wait and see what June brings with it."

This YouTube paints a picture that there are three mobile phone players in US: Motorola, Apple and Microsoft. I do listen to what US isn't talking about. Nokia isn't a big player in US yet. But I guess Olli-Pekka is determined to take out a bigger slice of that market as well. A lot of new product development will be seen before the summer. Apple is most probably not going to be alone in the public space when iPhone is presented. Let's see what the future brings. Have a dingle ding mobile day