CTV.ca News Staff
Microsoft Corp. made a bold move Friday to take over Yahoo! Inc. If the deal goes through, the US$42 billion bid could help the software and technology company gain a major partner in its attempt to take on Google, which it has been trying to topple alone without success.
The unsolicited offer was announced Friday in a letter to Yahoo's board of directors from Microsoft CEO Steve Ballmer. The offer is comprised of $31-a-share of cash or Microsoft stock, and was 62 per cent higher than Yahoo's Thursday closing price. The search and advertising market that Microsoft is vying for is expected to nearly double in worth by 2010 to $80 billion. So far, Google has outpaced Microsoft in search engine users in every quarter since Google's initial public offering in 2004. In the latest three-month period, Google made a profit of US$1.21 billion, with sales going up 52 per cent.
Analysts say Google's rise could threaten Microsoft's future. Microsoft is the world's leading technology company, but that may not be the case in the years ahead unless it can generate more revenue online from advertising. It also needs to create a more loyal Internet audience which increasingly looks to the Internet for services and computer programs.
In the 1980s and 1990s, Microsoft overtook IBM Corp. when technology shifted away from mainframe computers to personal computers. Industry insiders say there are real concerns now that similar market and technological shifts could knock Microsoft off its leading position if it doesn't take appropriate steps.
"Microsoft has to do this deal. It's a battle that Microsoft needs to win," said Jonathan Yarmis of AMR Research, a technology consultation firm.
Canadian connection
The takeover bid could have implications for Rogers Communications here in Canada. It could become a Microsoft partner if the takeover goes through. Rogers, which owns one of Canada's largest Internet services, currently has a close relationship with Yahoo to manage its e-mail service.
Microsoft's MSN also has a similar relationship with Rogers rival Bell Canada's Sympatico. The merger may create a situation where the two Canadian companies have the same American partner.
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*CTV.ca
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