It may happen, but it won't work:

http://techfold.com/2007/05/04/microsoft-to-acquire-or-mer...

...would these two battle damaged, beleaguered companies be able to successfully execute on an acquisition or a merger? I tend to think not: even if the execution was successful, the act would consume so much organizational resources from each for so long that their market positions would erode badly in the meantime as their business languishes while integrating...

Considering that both Yahoo and Microsoft need to get their own houses in order badly, and that throwing an integration on top will just cause further disarray, I hope this discussion remains conceptual or results in tighter business relationships without a purchase or merger.

Well I guess I won't go for that interview with Yahoo next week! Wankers.

Will it happen? Clearly they leaked the fact that they're in early negotiations to see what the market thinks. This means that they're at least semi-serious. It's also a sign that Yahoo isn't straight-up rebuffing MSFT like they (apparently) did last year. So, it doesn't seem out of the question.

The problem with a merger of this magnitude will be whether or not they'll be able to integrate in a timely fashion. As the FT points out, a merger will instantly make this new entity a legitimate competitor to Google at least on paper. What remains to be seen is how quickly they'll be able to turn two distinct search operations into one coherent business. Also, clearly search is also only one aspect of these two large companies. Who knows how the other elements of each company will coalesce?

Perhaps even more importantly: will this beast be able to move as nimbly as Google in a sector that's experiencing rapid growth especially after Google has set such a torrid pace and doesn't seem close to slowing down?

I am convinced that Google will continue to out-innovate both companies if they remain independent or this new amalgamation if the merger is pulled off.

Heads up! Your "Washington Post" link is actually the Wall Street Journal.

Not gonna happen. It's some manipulation by hedge funds that got burned on Yahoo's earnings. I'm sure they're all quietly unloading Yahoo's common in the increased trading volume today.

I predict Google will buy Yahoo! at the last minute. Just to piss Microsoft.

i hope they don't merge. i accepted a job offer at yahoo just last week and will be disappointed if the MS machine fucks everything up. i think the culture and mentality of yahoo put them on the right track to do some great things. (as seen with their growth in the social web space)

MS just doesn't get it. if i wanted to work for them, i would have asked them for a job.

fatbastard's post is the best so far because it reveals anger and cynicism so pure that only the truth can result from its expression.Those of us who rely on Valleywag to illuminate a golden path through life must learn to treasure his wisdom.

scientologists or bill gates? tough call.

wasn't the deal from sometime ago worth $80m? and yhoo's stock price spiked then but things came back to planet earth once that soured. now we're back to playing this game again??? let's not forget about the 800000 that Semel received as salary for 2006 that were strike priced at ~$32 .

fatbastard, that is a very interesting notion.

am i the only one that sees private equity firms getting into the mix, i see that as a more likely exit than msft, frankly.

Did anyone notice that in all of these articles there was not a single mention of last year's Microsoft fiancee: AOL. They are dead, irrelevant, apparently not even worth kissing if Yahoo leaves MSFT at the altar.