Microsoft, the software giant who was willing to buy the Internet pioneer, Yahoo for $33 a share, announced that they abandoned their plans of acquisition. But, there are rumors that Yahoo may shortly sign a search deal with Google. The problem is that Yahoo's investors aren't so happy because of its stocks which closed down 10%. It happened because if there's no Microsoft deal, there is less support for the acquistion premium that has buoyed Yahoo's stock since Microsoft's first offer. Investors are not seeing Yahoo's deal with Google as valuable as the Microsoft buyout offer because any deal that can pass regulatory muster most likely would require Yahoo to keep its own search ad unit in operation. In the deal created by Yahoo and Google there would be a creation of a open search ad auction in which any company could participate. In their statement Yahoo indicated that they saw little value to selling off its search operation to Microsoft, for this reason it seems unlikely it would do that with Google either.
In my opinion, Yahoo should sell their search operations because it is the only way they can at least try to follow Google and expand their market share. At the present moment Google is superior in its ability to make money out of search ads, which eliminates Yahoo as a competitor. If yahoo is not able to compete by themselves, with their own power, they should seek for other forces that could help them in regaining their competitive force.
20600642 Late Entry #13
