[Infowarrior] - Microsoft offers to buy Yahoo for $44.6 billion

[Richard Forno]

Microsoft offers to buy Yahoo for $44.6 billion
Friday February 1, 7:48 am ET
http://biz.yahoo.com/rb/080201/microsoft.html?.v=11

NEW YORK (Reuters) - Microsoft Corp (NasdaqGS:MSFT - News) said on Friday it
has offered to buy Yahoo Inc (NasdaqGS:YHOO - News), the popular Web portal,
for $44.6 billion in cash and stock, seeking to join forces against Google
Inc (NasdaqGS:GOOG - News) in what would be the biggest Internet deal since
the Time Warner-AOL merger.

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Microsoft offered to buy Yahoo for $31 per share, a 62 percent premium over
Yahoo's closing stock price on Nasdaq Thursday. Yahoo shares jumped to
$30.75 in premarket trading.

Yahoo said the online advertising market is growing rapidly and expected to
reach nearly $80 billion by 2010 from over $40 billion in 2007. Yahoo added
it is "increasingly dominated by one player," referring to Web search leader
Google.

"We have great respect for Yahoo, and together we can offer an increasingly
exciting set of solutions for consumers, publishers and advertisers while
becoming better positioned to compete in the online services market,"
Microsoft Chief Executive Steve Ballmer said in a statement.

Yahoo was not immediately available for comment.

The company has been losing market share to Google and warned earlier this
week that it faced "headwinds" in 2008, forecasting revenue below Wall
Street estimates.

On Thursday, Yahoo disclosed that nonexecutive Chairman Terry Semel was
leaving the board, ending its formal ties with the former chief executive,
who is credited with reviving the company and then losing touch.

Semel, replaced as CEO last June, had faced heavy criticism for failing to
move faster to meet both rival Google's challenge in Web search and
advertising and, more recently, the rise of social networking sites such as
MySpace and Facebook.

U.S. stock futures jumped on the Microsoft news, which offset a
disappointing earnings report from Google late Thursday.

Paul Mendelsohn, chief investment strategist at Windham Financial Services,
said a deal made sense.

"Yahoo is having a really tough time competing against Google. Whether it's
a good price, I can't see anybody else who is going to outbid Microsoft,"
Mendelsohn said.

Microsoft said it had identified four areas that would generate at least $1
billion in annual synergies for the combined entity.

Tim Smalls, head of U.S. stock trading at brokerage firm Execution LLC, was
less enthusiastic about the benefits of a tie-up.

"Shocking! To me, the premium seems exorbitant, for what is a dwindling
business. I personally don't see how the synergies of Microsoft-Yahoo is
going to take on Google," Smalls said.

(Reporting by Franklin Paul and Tiffany Wu; Editing by Lisa Von Ahn/Jeffrey
Benkoe)