Yahoo! Vs Microsoft: Who Wins?

Lead advisers Goldman Sachs and Lehman Brothers, the US investment banks and bid partners- including Time Warner- of Yahoo!, after a session of intense brain storming, have figured out a way to emerge out of the $45 billion (£23 billion) bid approach from Microsoft.

Yahoo!’s break-up with Microsoft and software mammoth’s talks with companies like Time Warner with an effort to launch a separation bid of Yahoo, led Yahoo! to reconsider and restart the merger talks with AOL, the online business owned by Time Warner.

If the talks reach a desired end the deal could be worth $10 billion (£5 billion).

Earlier the deal between Yahoo! and AOL could not be manifested due to some fiscal differences. But now that the dagger is hanging on the head of Yahoo!, currently undergoing a phase of economical insecurity of downturn by the software giant, would initiate talks from a new perspective between the two.

Other media and technology firms like Google or Disney are also under consideration for conglomeration with Yahoo!, only a strong merger can save the online search engine from the pangs of Microsoft at the moment.

Microsoft’s frustration with Yahoo! over loosing the market shares in past 12 months and the consequent emergence of Google as a dominant web master in the advertising market are the main causes of separation.

If the talks are to be believed, the board of Yahoo! will not get into any kinds of talks with Microsoft if the suitor group offers anything less than $12 billion and the share price value has to be more than $40.

Microsoft actually wants to make big bucks out of online advertising market (worth $40 billion) expected to duplicate by 2010 for which it must give a good enough competition to Google.

Getting a strong hold over Yahoo!'s internet search engine will arm Microsoft to give tough times to Google.

Leaving the threat from Microsoft, Jerry Yang, co-founder and chief executive of Yahoo! has impending danger from the billionaire activist investor, Mr Icahn.

To supersede the present members of Yahoo! board he has suggested his own name and the names of few other executives as well.

Therefore, the board members of Yahoo! want to make a significant deal possibly with AOL to prevent the shareholders from re-electing the board in August 1 meeting.