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Sci-Tech
Almotamar Net - Toronto — — Microsoft Corp. revealed plans for a surprise $44.6-billion (U.S.) cash and stock takeover offer for struggling Internet search pioneer Yahoo! Inc., in a move that would not only dramatically increase its share of the global Web search business but would have serious implications for top dog Google Inc.

Saturday, 02-February-2008
Almotamar.net Google News - Toronto — — Microsoft Corp. revealed plans for a surprise $44.6-billion (U.S.) cash and stock takeover offer for struggling Internet search pioneer Yahoo! Inc., in a move that would not only dramatically increase its share of the global Web search business but would have serious implications for top dog Google Inc.
The world's largest software company made the announcement Friday morning after sending a letter to the Yahoo board of directors dated Jan. 31. Microsoft is offering Yahoo shareholders $31 per share for all outstanding share of Yahoo! common stock, which represents a 62 per cent premium above the price that Yahoo! shares closed at last night.
Yahoo confirmed that it had received the offer and said its board would consider the deal.
Yahoo said in a statement that its board would evaluate the proposal “carefully and promptly in the context of Yahoo's strategic plans and pursue the best course of action to maximize long-term value for shareholders.”

Microsoft Corp. is offering to buy search engine operator Yahoo! Inc. for $44.6-billion in cash and stock in a move to boost its competitive edge in the online services
Yahoo!
Since reaching a 52-week high of $34.08 in October, Yahoo shares had fallen 46 per cent before Microsoft revealed its $31-a-share bid on Friday.
Microsoft

Microsoft shares have also slipped from their 52-week high of $37.50, reached in early November, but had only fallen about 12 per cent from that level prior to its bid for Yahoo! At noon on Friday, Microsoft shares were off 6 per cent, at $30.65 a share.
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Microsoft Corp. chief executive officer speaks during a morning briefing about the takeover offer

Microsoft Corp. has pounced on slumping Internet icon Yahoo Inc. with an unsolicited takeover offer of $44.6-billion
The announcement sent Yahoo's share price up 43 per cent by noon in New York, up $8.45 to trade at $27.63. Google shares meanwhile fell more than 8 per cent, losing $48.80 to trade at $515.50. Microsoft shares were off 6 per cent, at $30.65 a share.
“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. “We believe our combination will deliver superior value to our respective shareholders and better choice and innovation to our customers and industry partners.”
Both Yahoo and Microsoft trail Google in overall Internet searches and advertising revenues generated from keyword-based search advertising and have struggled to catch up. While Microsoft has recently made a series of investments dedicated to building its online search-based advertising business — most notably the $240-million agreement it struck with the social networking company Facebook Inc. in September — Yahoo has floundered as it has begun to emphasize a push towards the mobile search market.
In a conference call with analysts, Mr. Ballmer called the proposed deal “the next major milestone in Microsoft's company-wide transformation to embrace on-line services over all.”
Microsoft and Yahoo, he said, “really do share a vision of the potential of on-line search and advertising” and combining the two companies will result in “an incredibly efficient and competitive offering for consumers, for advertisers and for publishers.”
He said Microsoft has been talking to Yahoo management about a deal “off and on for 18 months,” but that Yahoo said a year ago that “it wasn't really the right time” to discuss an acquisition.
“We believed then in the benefits of combining the two companies and we believe now in those benefits more than ever,” he said. “We're very confident [this] is the right path for Microsoft and Yahoo.”
He also dismissed with a curt “no” an analyst's question as to whether this means Microsoft would halt plans for other major acquisitions in such areas as enterprise software.
Asked during the call about potential competing bids, perhaps from media companies, Microsoft corporate counsel Brad Smith said “obviously any number of companies might have an interest.”
However, he also said Microsoft has made a “very compelling offer” and that “the reaction from publishers, which includes a lot of the media companies, has been very positive.
“We've been getting unsolicited feedback this morning from advertisers and publishers that this . . .will create a more compelling competitor in the marketplace.”
The one company not in a position to launch a rival bid, Mr. Smith argued, is Google, which, he said already has a nearly 75 per cent share of the world-wide market for on-line paid search.
“Given its super-dominant market share, Google is clearly prevented by anti-trust laws from buying Yahoo or this [on-line search and advertising] business from Yahoo,” he said.
Kevin Johnson, who heads Microsoft's platforms and services division said on-line advertising is now a $40-billion-a-year business and is expected to reach nearly $80-billion within the next three years.
“So it is a significant growth opportunity and a critical element of the business model for monetization of consumer internet services...that we create and the internet services of our partners,” he said.
The market is currently “dominated by one big player,” Mr. Johnson said without naming Google.
“By combining the assets of Microsoft and Yahoo, we can offer a more competitive choice for consumers, advertisers and publishers,” he said.
“The industry will be better served by having a more credible alternative in the areas of search and advertising.”
Microsoft said that by combining, the two companies could save “at least $1-billion” a year in costs, while benefiting from economies of scale, accelerated innovation through the combination of their engineering talent as well as operational efficiencies.
Yahoo has faced criticism in the past for the way it has handled its core Web search and advertising businesses, which ultimately led to the shakeup at the executive level that landed Jerry Yang in the top post.
Yahoo investors would be smart to accept the offer since it will be difficult for the company to reach a $31 stock price based on its own organic growth, according to Jeffrey Lindsay, senior analyst for the Internet at Sanford C. Bernstein in New York.
“From a pure investor perspective we think its an excellent deal,” he said. “But possible resistance might come from Yahoo management because Jerry Yang and [co-founder] David Filo own a lot of the shares personally, and secondly there's the possibility of someone else stepping in and making a counter offer.”
Advertisers are likely to look more favourably upon a Yahoo-Microsoft alliance, since a consortium of their paid search businesses would command about 20 per cent of the market and reach a much broader combined audience, he said.
“That is much more attractive to advertisers than two separate pieces of 10 per cent of the market,” Mr. Lindsay said.
David Cockfield, who helps manage $1.8-billion at Leon Frazer Associates in Toronto and holds some Microsoft shares, questioned the cultural fit of the two companies and said he wants to know more about where the massive acquisition fits into Microsoft's game plan.
However, he also said the proposed takeover shows there is still room to make deals despite the dismal start for stock markets in 2008.
“It's probably going to give the general market a boost, and cause people to start looking around,” he said. “It underlines the fact that looking at the US corporate sector...outside of the financial area they're in very good shape, they have huge amounts of cash available.”
This means there likely will be more “straight corporate deals rather than the fancy financial market deals where the hedge funds are involved,” Mr. Cockfield said.
That includes the tech sector. “All of these guys are multi-nationals, they're doing lots of business outside the US, they're at a size where growth prospects within their particular sector may be somewhat limited, so the takeover route becomes attractive. And they have the money — that's the important thing. They have the dough burning a hole in their pockets.”

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