The Microsoft and the Yahoo
Like a soap opera, things are heating up between Microsoft and Yahoo, complete with threats, machinations, and denials. As things stand right now, I see five possible outcomes.
1) Nothing happens.
Very unlikely. Yahoo’s numbers aren’t there right now, and an attempt to stay the course would create considerable unrest amongst Yahoo shareholders.
2) Microsoft purchases Yahoo in a friendly takeover.
Possible, but unlikely. I just don’t see the two finding a number that is large enough for Yahoo’s board, yet small enough for Microsoft.
3) Microsoft purchases Yahoo in a hostile takeover.
Possible, but a poor outcome for both. Microsoft and Yahoo would have a hard enough time merging cultures in a friendly acquisition. The resentment of a hostile takeover would make successful integration impossible. The net-net would be marketshare lost to Google by the combined entity.
4) Yahoo outsources its advertising to Google.
Attractive, but unlikely. Yahoo is testing these waters right now. One can argue that this would be the best outcome for Yahoo shareholders, but I doubt either the US or EU trade commissions would get on-board.
5) TimeWarner rolls AOL into Yahoo.
Most likely. Either this deal, or a similar deal that greatly increases Yahoo’s advertising inventory, is probably going to happen. This would assuage the shareholders’ fears, at least for a while. Whether or not Yahoo can show long term growth, however, is a legitimate concern.
