New reports today suggest that, having walked away from their proposed purchase of Yahoo, Microsoft has turned its affections toward Facebook.

But wait–there are also reports that they’re trying to buy AOL.

Or not. Some reports are suggesting they’re still after Yahoo.

Man, does Bill Gates have some money burning a hole in his pocket or what?

Am I the only one starting to see Microsoft as the high school senior who just got $1000 in graduation money and can’t decide on what unnecessary & useless thing he wants to buy first? I mean, Yahoo, AOL, and Facebook are three very different companies… with three very different customer bases.

But they’re also very large companies.

Maybe Microsoft just wants to make a big splash. Maybe they’re more like the school bully who reigned for years until a new bully (Google) moved to town and starting stealing his press. So the first bully starts beating people up with vigor, left and right, just to make sure no one forgets that he was there first.

I’m not sure why anyone would be interested in buying AOL–I don’t even know what they do anymore.

I half expect to see headlines this afternoon like “Microsoft Submits Bid to Purchase NFL” or “Microsoft in Talks to Buy China.”  Personally, I’d rather see Microsoft take the billions of dollars they’re dying to throw away on some huge merger and instead spend it on, oh, maybe making Vista run faster.

But that’s just me.

AOLHoo?  YahooOL?  Let the next round of name-guessing begin. 

Seems as though Yahoo has told Microsoft to go take a hike.  Well, that’s not a terribly surprising move, but that doesn’t mean it’s a smart one. 

Rumors are now swirling that they’re back talking merger with AOL.  Yeah, right.  Because AOL is sooooo much better an option than Microsoft (show of hands:  is anyone else frankly surprised that AOL even still exists?). 

I think Yahoo telling Microsoft to get lost is really just a corporate version of the old salary-negotiation thing.  They’re trying to get Microsoft to up their bid, plain and simple.  I don’t think there’s really any benefit for Yahoo in merging with AOL…in fact, the only benefit appears to be that AOL isn’t Microsoft. 

I don’t think for a second that Yahoo is really going to merge with AOL.  This is just a bargaining tactic.  I think the AOL-merger is just as likely as a Yahoo/PizzaHut merger.  Mmmm.  Pizza. 

So now the world waits to see how Microsoft responds.  I’ve read about how Microsoft’s stock has dropped a bit since their offer went out to Yahoo–lowering Microsoft’s value an amount almost identical to what they offered Yahoo.  Ouch.  So… will they increase their offer even more?  Or will they hold the line?  Whatever they choose to do in response, it’s pretty clear that this is all going to get more interesting from here.  Seems obvious, too, that Yahoo as we know it–as a standalone company–is nearing its end. 

We’ll do our best to stay up on the news and keep you updated.  I think Microsoft is still going to be buying Yahoo, when all is said and done.  Exactly how and when and why and how much is what we’re waiting to see, but any other outcome would surprise me.  And yes, before you ask… I’m totally an expert in the area of $44 Billion mergers. 

Yahoo doesn’t really want to be owned by Microsoft.  And who can blame them?  I know I don’t want to be owned by Microsoft.  A Microsoft takeover of Yahoo will almost certainly mean a loss of a lot of jobs, as divisions get merged and rolled together.  And Yahoo has always seen Microsoft as competition, so there’s some underlying dislike there already. 

Yahoo’s CEO sent a memo out to his troops, detailing the current status.  He says:

“Our board is thoughtfully evaluating a wide range of potential strategic alternatives in what is a complex and evolving landscape.”

Translation:  “We’re desperately trying to find some non-Microsoft company to buy us out instead, but time is running out.” Rumors swirl that Yahoo put out feelers to the likes of Google, NewsCorp, AOL, and even Comcast… to gauge possible interest in one of those behemoths taking them over instead of Microsoft.  It’s like in school, when I was a big nerd, and allowing myself to be bullied by one guy meant that all the other bullies would leave me alone.  The lesser of two evils, if you will. 

Yahoo just doesn’t have many options.  They’re already cutting jobs and losing profits.  I’m no economics professor (at least, not anymore I’m not), but Microsoft timed their offer rather perfectly.  From the article:

If Yahoo rejects Microsoft, most analysts believe the company will have to line up another acquisition offer or make radical changes to satisfy disillusioned shareholders.  But most analysts doubt any other potential suitor will have the financial muscle — or desire — to try to outbid Microsoft, which has $21 billion in cash and a market value of nearly $265 billion.

If Yahoo spurns Microsoft’s advances, and doesn’t find another company to buy them, they will now likely face a lot of angry stockholders who might wonder why.  As this article states:

If it spurns Microsoft’s offer, Yahoo’s board of directors will be under pressure to give stockholders a soothing cash payout or even borrow money to buy back shares and turn the firm private.

So, Yahoo is backed into a corner.  They have to do something.  And so far, none of the other bullies have stepped up to plop down the billions.  One thought I read a lot about is that Yahoo–whose search used to be powered by Google as recently as 2004–might turn over it’s search operations to Google again, cutting enough costs in the process to allow them to stay independent.  But Yahoo worked hard enough for years to develop their own search division–to compete with Google–that just reverting to the past would seem like a giant step back. 

Google, you may know, is vehemently against this merger.  Cue the chorus of “Duh” from the peanut gallery.  A Microsoft/Yahoo merger means a huge new competitor for Google’s dominance in search, and Google knows it.  MicroHoo (or YahooSoft) would also be a company bolstered in the area of online advertising–another market Google has a bit of dominance in.  I’m not sure Google’s argument that this merger hinders an open, competitive web holds any water (especially when compared with the numerous acquisitions and mergers Google themselves are guilty of. 

We’ll keep you posted.  Just know that one way or another, Yahoo as we know it is going to change.  My money’s on the merger going through.  And while Yahoo and Google may not prefer that, I do think the end result to us users is a good one.  A significant competitor in search can only mean better search service for all us computer users out here in the real world. 

Microsoft has a crush.  On Yahoo.  And their in the courting phase, so Microsoft is sending flowers and candies and standing outside Yahoo’s window holding a boom-box that plays Peter Gabriel’s “In Your Eyes.” 

In case you’re not following me:  Microsoft has made a takeover offer to purchase Yahoo for $44.6 Billion. 

Wowzers.  That’s a lot of cash.  More than I’ve got lying around.  This dwarfs Google’s purchase of YouTube for $1.6 Billion.  (Also, how weird is it to read a story about a possible Yahoo takeover on a Yahoo News page?)  Will the new company be called MicroHoo or YahooSoft?  You make the call.  But the thought of a possible Microsoft Yahoo merger sort of blows my mind.

Who knows if Yahoo is going to take the offer.  They did just have to lay off about 1,000 employees, so I’m sure they’ll consider it.  This article has a copy of the letter Microsoft sent to Yahoo’s board of directors.  Here’s an excerpt:

“We believe this proposal represents a unique opportunity to create significant value for Yahoo!’s shareholders and employees, and the combined company will be better positioned to provide an enhanced value proposition to users and advertisers. We hope that you and your Board share our enthusiasm, and we look forward to a prompt and favorable reply.”

Well that sounds like one of the sweetest, most romantic suggestions I’ve ever heard.   

And think about the kind of super competitor to Google that would be created by a Microsoft/Yahoo merger–I’m talking in terms of search here.  Their collective marketshare, customer base, and expertise would combine to form the first serious challenge to Google’s dominance in years.  It would allow them to innovate instead of just always following Google’s lead.  So for that reason, I’m all for it.  Competition is good for the marketplace; it makes companies work harder and perform better. 

Stay tuned for more information on this possible purchase.  Like papparazzi on the Hollywood streets we’ll be following this potential coupling of two of the big three web/search giants.  Microsoft has gotten down on bended knee and is now nervously awaiting the blushing Yahoo’s answer.  Will it be “Yes” or “No?”  Are Microsoft and Yahoo getting married?  Oh–and will it be MicroHoo or YahooSoft?  Because that’s almost as important as whether or not the merger goes through.  Almost.