It seems like Microsoft and Yahoo! are talking again to such an extent that is was either required, or in Microsoft’s interest to release the following statement:

Microsoft Issues Statement Regarding Yahoo!

Microsoft announced that it is continuing to explore and pursue its alternatives to improve and expand its online services and advertising business.

REDMOND, Wash. — May 18, 2008 — Microsoft Corp. today issued the following statement:

“In light of developments since the withdrawal of the Microsoft proposal to acquire Yahoo! Inc., Microsoft announced that it is continuing to explore and pursue its alternatives to improve and expand its online services and advertising business.  Microsoft is considering and has raised with Yahoo! an alternative that would involve a transaction with Yahoo! but not an acquisition of all of Yahoo!  Microsoft is not proposing to make a new bid to acquire all of Yahoo! at this time, but reserves the right to reconsider that alternative depending on future developments and discussions that may take place with Yahoo! or discussions with shareholders of Yahoo! or Microsoft or with other third parties.

“There of course can be no assurance that any transaction will result from these discussions.”

This comes just a day after Carl Icahn proposed to replace the Yahoo! board in an attempt to revive the Microsoft acquisition deal…

The current guess is that Microsoft will try to buy just Yahoo’s search business in an effort to prevent a Yahoo-Google deal that’ll make Google take over Yahoo’s paid search business.

I guess there will be more to come on that…

Tags: Microsoft, MSFT, Yahoo, YHOO

Some first thoughts about the implications of Microsoft taking over Yahoo:

• Microsoft’s Vista Gadgets suck. Yahoo has it going pretty well with its widgets that work on many platforms other than Vista.
  Maybe Microsoft will drop Gadgets and support widgets natively?
• Yahoo Messenger is already integrated with Microsoft’s messenger. And its .NET and has a cool new WPF interface. Maybe it can replace buggy Microsoft Messenger.
• Synergy in Live Services:
  • Microsoft Popfly and Yahoo Pipes (Popfly has things to learn from Pipes)
  • Yahoo’s small business services + Office Live (and CRM live, etc.)
  • Online gaming. Microsoft has its gaming studios and Xbox Live! and Yahoo is big on fantasy sports. There’s room for synergy there…
    Yahoo’s online games could be a nice addition to Microsoft’s casual gaming platform.
  • Yahoo Finance to join Microsoft Live Services and take on Google Finance?

Lots of synergy opportunities out there…  I can see why Microsoft+Yahoo makes perfect sense…

Tags: Microsoft, MSFT, Yahoo, YHOO

There has been a lot of rumors and Dennis Howlett just broke the news on ZDnet. It’s also on FT now…
It’s interesting that I got the news via Twitter before the online media broke the story…

Jeff Pulver suggests (on Twitter) that Google (GOOG) is a potential competitor to Microsoft’s offer.
Now, while everything is possible, I don’t think this is going to be the case since the the two companies simply have an opposite strategy - which will result in a big cultural clash.Google has always been about automated content - automated search, news aggregation and even shopping. Yahoo on the other hand has always been about human generated content - people using its services to generate content (Yahoo started as a service for people to classify web-sites).

I think Yahoo fits exactly into Microsoft’s Live Services strategy and such a takeover (if it takes place) will grately enhance the live services platform - which makes MSFT and YHOO and great fit together.

Anyway, It looks like its going to be an interesting trade day on NASDAQ today…

Tags: GOOG, Google, Microsoft, MSFT, Yahoo, YHOO