Microsoft and Yahoo!

| Business + Industry Consolidation

msft-yahoo-2.jpgHuge news –about as big as it gets. Microsoft makes $44.6 billion bid for Yahoo!. You can read the entire letter sent to the Yahoo! board here http://www.alleyinsider.com/2008/02/microsofts-letter-to-yahoo-board.html.

The implications are significant in nearly every aspect of online advertising. On the surface we see that the combination is one that offers many opportunities in search and display, but this goes well beyond that. It will be interesting to watch how these two will work together on new software releases, in the mobile space, and obviously what develops as their strategy around networks and exchanges. I also wonder if Microsoft will be forced to shed some assets (i.e. Avenue A), since it will undoubtedly appear to be a conflict of interest.

At a 60% premium to what I think is an undervalued Yahoo! stock, it will be hard say no, and vote against this as a shareholder. I guess I should have pulled the trigger yesterday when I was thinking of picking up some shares.

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