Tech Analysts Debate: Will Microsoft Buy Yahoo?

By Steven Vaughan-Nichols  |  Posted 2006-01-05 Print this article Print

While some analysts believe the price tag for Yahoo may be beyond even Microsoft's cash roll, others are not so sure the software giant is willing to sit on the bench and watch Google win the ad revenue game.

Was $80 billion too little for Yahoo? If you believe a recent story in the Los Angeles Times, as many stock buyers appeared to have, that was indeed the case. But would such a deal really make sense for the Windows giant?
Dan Kusnetzky, IDC vice president for system software research, cant see it.
"Since Microsoft is already presenting MSN in that space, I dont know what benefit they would get by acquiring Yahoo," said Kusnetzky. Gordon Haff, senior analyst for research house Illuminata Inc., agrees and elaborated on why the deal wouldnt make sense. Click here to read John Pallattos thoughts on a Microsoft-Yahoo deal. "With a market cap of over $58 billion, Yahoo would be a huge acquisition for even a Microsoft—both in terms of money and integration," said Haff. "While its true that Microsoft has done a basically piss-poor job with MSN over the years, I seriously question whether a Yahoo purchase would be a practical way to re-bootstrap its online presence," Haff said. Laura DiDio, however, can see reasons why Microsoft might pull the trigger on a Yahoo acquisition. "I think Microsoft has to make a dramatic move, and I dont rule anything out," said DiDio, the Yankee Groups research fellow for application infrastructure and software platforms. "Whatever anyone thinks of Microsoft, Bill Gates and Steve Ballmer, no one would deny that they are fierce and committed competitors," she said. "In Google, they face the strongest, richest, most edgy competitor theyve seen in a generation. [Google co-founders] Larry [Page] and Sergey [Brin] are, in some respects, younger versions of Steve and Bill. Read the full story on Tech Analysts Debate: Will Microsoft Buy Yahoo?
Steven J. Vaughan-Nichols is editor at large for Ziff Davis Enterprise. Prior to becoming a technology journalist, Vaughan-Nichols worked at NASA and the Department of Defense on numerous major technological projects. Since then, he's focused on covering the technology and business issues that make a real difference to the people in the industry.

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