MicroYahooSoft

by THE WAV GROUP on February 1, 2008

There may be a landslide shake up happening in the search engine industry which could form a company to rival Google’s 50% marketshare of search.

This consolidation could lead to disapated competition in pay per click, and drive up costs for real estate online marketing.

As reported in the New York Times:

“Microsoft said Friday that it would offer $44.6 billion for Yahoo, the ailing search giant. The surprise bid of $31 a share in cash and stock represents a 62 percent premium to Thursday’s closing share price.

The proposed acquisition, the largest ever by Microsoft, would give some relief to Yahoo’s long-suffering shareholders, who have seen the company’s stock slide nearly 32 percent this year. It would also create the most formidable competitor yet for Google, the search engine giant.

Microsoft’s offer was unsolicited and its premium unusually high, marking it as an aggressive bid that could potentially turn hostile.

One potential roadblock to a Microsoft-Yahoo merger would be antitrust concerns, especially from the European Union. A spokesman for Neelie Kroes, the E.U. Competition Commissioner, declined to comment on Microsoft’s proposal, Reuters reported Friday.

Another potential challenge would be the task of merging two very different corporate cultures and technology systems.

Microsoft’s Yahoo bid may end up putting other companies in play. High on the list of potential targets is AOL, which is the middle of a turnaround effort by its parent company, Time Warner.”

I see this as a very dangerous step for Microsoft. I know they have a lot of cash, but so does Google. If Microsoft reduces their cash position, Google could reduce pay per click rates and force MicroYahooSoft to lower rates to match – expanding the acquisition costs well above the $44 Billion tender.

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