Friday, May 4, 2007

Can Silver+Bronze strike Gold?

Well,i'm talking about possible Microsoft-Yahoo merger rumors that became news of the day.The news says that the deal could be worth of $50bn??Microsoft's interest in yahoo is well known and recent msn-yahoo IM deal can say something about cozy relations between the two companies.Pressure is mounting on Microsoft after it lost Double click deal to google.I don't know whether the deal can go ahead or not but lot of questions remains unanswered.

1)Both are struggling with search technology to compete against google,so i don't think the deal can make the situation any better as combined market share would be around 30% compared to Google's 65%.
2)In terms of ad revenues Yahoo launched it's panama ad platform only recently and Microsoft's woes are well known.Both are unestablished and the merger can make situation more worse for them.
3)Microsoft investing more than $7bn on R&D and web services strategy and it believes it can build it's own technology(windows live) than buying.Microsoft also known for it's reluctance to big acquisitions.If you go by this the deal can never become reality.
4)Cultural and integration problems obviously pop up and Microsoft's evil image can make it more complicate.
5)Mergers usually helps companies to complement each other but Yahoo and Microsoft competing in similar areas like E-mail,IM,Search etc.The deal can rise audience numbers but can also attract anti trust watchers attention.
6)May be Microsoft will take some stake in Yahoo rather than acquiring completely.That can workout for both companies for gradual merging.

Currently both companies are clearly struggling in search but Microsoft's deep pockets can make their combined search more powerful and that's what Microsoft has been looking for.

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