Yahoo-soft?

Those chatty "people familiar with the situation" have told the Wall Street Journal there are some folks inside Microsoft who'd like it to take a stake in Yahoo. 

"Microsoft appears to be falling farther behind Yahoo and Google, said Henry Ellenbogen, portfolio manager of the T. Rowe Price Media & Telecommunications fund.  He told the Journal a  Microsoft bid for Yahoo is possible. 

Personality could be the deciding factor.  Jerry Yang and other insiders at Yahoo would be hard-pressed to sell to Microsoft, the Journal said.  But ex Ask.com-chief Steve Berkowitz, who takes over the chores running MSN early next month, is a veteran of 40 acquisitions over his career, and one more could be the key.  "Top management remains open to a deal with yahoo," the Journal concludes.

Henry Blodget (I know, I know - but he's still a smart guy) thinks Microsoft should spin off MSN as a way of improving focus in Redmond.  (Is there REALLY going to be another delay shipping Vista?

Microsoft needs something!  Google and Yahoo have the Internet mojo right now, while Microsoft has neither the buzz nor prospects for a stock option kicker.  That means the best and brightest are not eagerly trekking across the northern border of California to search for Web gold. And while stock options are no longer a favored currency at Microsoft, if you're already there, and been on the payroll five years, with any options at all, you lose.  "Underwater" doesn't begin to describe your situation.

Here's the Journal YHOO/MSFT story.  BTW, WSJ.com is having an open house.  It's all free :)

Comments

[C. Cirrone]

The current models of software development and distribution used by MSFT are old and trite. The rule of today is “why build, when you can buy.” Steve Berkowitz and Hank Vigil will make a formidable acquisition team. The best development that Ballmer can make now is to unleash them to do some serious acquisitions or at least form some serious alliances. When chasing your competition is not working the only solution left is to try and leapfrog him.

In addition, shareholders are starting to get impatient. Nothing is worse then an impatient shareholder talking to the media, especially the likes of T. Rowe Price and RCM Capital Management. It’s only a matter of time before more jump on the bandwagon.

Yahoo is fairing no better off. It’s lost whatever “first mover” advantage it once had and can’t get a handle on how it can best monetize its traffic. Like MSFT, its stock continues to trade flat.

So while Ballmer and Yang get ready to make their next series of "Google-killer" product announcements, Google continues rolling along stealing eyeballs, market-share and revenue. The best announcement they both can make now is that they have combined complementary strengths into a Microsoft-Yahoo merger.