|For months now there has been a tremendous amount of speculation regarding the possible merger between Microsoft and Yahoo. Over the past week or so the rumors have picked up steam as reputable sources such as the New York Post and the Wall Street Journal are both reporting merger talks between Yahoo and Microsoft. The later putting a $50 billion price tag on Yahoo Inc (YHOO). Marketwatch.com was reporting that shares of Yahoo Inc. surged on Friday on reports it was in talks about a possible combination with Microsoft, but gave up nearly half the gains late in the day after a new report said the talks were no longer ongoing.
If the deal was to go through. it might be for all the wrong reasons. If Microsoft is looking to buy Yahoo simply to go head to head with Google, that is the wrong reason. Google understands search and where search is going. Microsoft needs to understand where search is going. They need to understand the imprtance of search and how to provide innovative search technologies to improve the user experience on Windows Live. Not to mention the fact that even if Microsoft acquires Yahoo they will only have 27-29% of the search market share. Maybe this will simply be a marriage of convenience. I find it difficult to believe that this "marriage" will work. Two different entities, two entirely different types of business, two different environments... the merging of the two will be difficult at best.
Microsoft does need to do something. Is purchasing the right thing to do? In my opinion, no. Microsoft needs to look at where they want to go. Google is innovative, full of creativity and growth. Microsoft is not, at least not when it comes to search. Any move that Microsoft makes will be in reaction to what Google has done. Successful organizations are proactive not reactive. I sense a major shakeup at Microsoft. While Yahoo has been restructuring for some time, it is not because they are preparing to merge with Microsoft.
Microsoft and Yahoo? Well stranger things have happened, but don't hold your breath. A partnership is possible but total acquisition I'm not so sure.
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