Microsoft + Yahoo = ???
I have to admit, it is really hard not to look at this very skeptically. First, Microsoft is offering a 62% premium on the current stock price. That seems like an awful lot to pay. And I don't care who you are, 46 Billion is a lot.
Second, I just don't see the synergies. Now, from a purely functional perspective there is some value. Obviously Yahoo! has a significant user base and presence. They also do several things pretty well (Flickr, Email, Search, Finance Portal, etc.). But this isn't a way to leapfrog Google. Assuming they don't lose any market share during the integration, the combined (worldwide) search market share is still only 16% compared to Google's 62%!
Furthermore, the technology stack couldn't be more different. Is Microsoft really prepared to run their internet presence off of PHP any MySQL? They've already purchased one major email service (Hotmail) and took over three years to migrate it from Apache/FreeBSD to Windows. Would they leave the Yahoo platform intact or migrate it to Microsoft technologies?
If you migrate it, you're going to end up with a lot of 'extra' Yahoo! engineers. If you don't, well, then you don't really have a lot of cost savings as part of the deal, you are just buying duplicate products for the (diminishing) revenue.
If this goes through, how many Yahoo! engineers will land at Google or new startups before Microsoft even has a chance to launch the first round of layoffs? This may be part of the plan, but it doesn't seem likely that the first ones to leave are necessarily the dead weight you would want to dump anyway. How many new startups are they instigating, who will in all likelihood be more competition for Microsoft.
Could someone else swoop in and grab Yahoo!? I can't imagine that happening at the current price, unless they were just trying to drive up the price. That seems like a long shot though.
If this deal goes through, I'm calling it the second nail in the Microsoft coffin. The first of course being the delayed launch of Vista and the poor adoption.