Finally it looks like Steve Ballmer and his team found too much of trouble running behind Yahoo for the past three months. Microsoft considers Yahoo to be its golden goose, and it feels that it will lay golden eggs in the future of online advertising.. I had written a post detailing What A Combined Microsoft Yahoo Looks Like weighing all the pros and cons if this deal went through. Somehow Yahoo managed to push Microsoft to such an extent that it had no choice but to accept defeat.

Now that Yahoo is staying on as an independent company, Jerry Yang and his team have some important tasks at hand. Let me reserve what exactly do they need to do for another post and focus on the ramifications of the breakout of this deal.

Microsoft issued a statement here

“Despite our best efforts, including raising our bid by roughly $5 billion, Yahoo! has not moved toward accepting our offer. After careful consideration, we believe the economics demanded by Yahoo! do not make sense for us, and it is in the best interests of Microsoft stockholders, employees and other stakeholders to withdraw our proposal,” said Ballmer.

Yahoo! responded by issuing a statement

“From the beginning of this process, our independent board and our management have been steadfast in our belief that Microsoft’s offer undervalued the company and we are pleased that so many of our shareholders joined us in expressing that view. Yahoo! is profitable, growing, and executing well on its strategic plan to capture the large opportunities in the relatively young online advertising market. Our solid results for the first quarter of 2008 and increased full year 2008 operating cash flow outlook reflect the progress the company is making.”

Looking at the two statements, it is clearly evident that Microsoft sounds like a looser while Yahoo sounds like a clear winner either way you look at it. Considering that Yahoo already has a search advertising deal with Google, Yahoo should now focus on improving the services and increase the ad revenue across the board.

With the Microsoft hurdle out of the way, I feel that there are more important Google and Yahoo tie ups on the way. This is just the beginning and from now on, Google has got some interesting times ahead, and it will be worth watching how Google dodges the challenges being thrown at it.

Look out for a post soon, wherein I’ll be detailing as to what Yahoo needs to exactly do to stay clear and profitable in the future. I’m no guru but I love Yahoo and would never want it to go into the evil hands of Microsoft.

What do you think about the fall through of this deal? What do you think is going to happen to Microsoft, Yahoo and Google as individuals? How do you think the Internet will react to this? Pitch in your opinion by dropping a comment.

I never wanted to this deal to go through and it looks its finally happening. Yay! I can’t be more happy for Yahoo than am right now .

The Wall Street Journal believes that Yahoo! will decline the $44.6 Billion Offer made by Microsoft to acquire it tomorrow. Should this happen tomorrow, it might set some wildfires tomorrow, as this would probably be considered as a bold move by Yahoo.

Yahoo has said that it will not consider any offer made by Microsoft under 40$ a share. Over a series of meetings, the Yahoo board believes that this offer seriously undermines the true value of Yahoo. If at all Yahoo pushes for atleast 40$ a share, this would mean another 30% premium for Microsoft, taking the potential bid to about 60$ billion.

The timing of Microsoft’s Offer made one thing very clear and that was that it is trying to buy Yahoo for cheap. Looks like the Yahoo Board have decided to put up a bold face, and have decided to raise the bid price beyond the 40$ mark. Also the original Microsoft offer on February 1st has itself lost value, as the bid was half cash and half stock, and Microsoft’s Stock price has fallen nearly 13% in this period.

I’m not very sure of what the Yahoo Board intends to do, but it does seem like, they want to be purchased by Microsoft after all. They are just trying to make a little bit more money on this deal. This also shows, just about how week Yahoo has become over the years. If they really wanted to say no, they would have said a firm No!

While the true reaction of the Yahoo’s board will be known tomorrow, but at the moment the ball is in Microsoft’s court. They have two options, one is to raise the offer price, or else go for a hostile takeover. Either ways it looks like Yahoo might end up being the cat in Microsoft’s Lion kingdom. But I’d like to see Yahoo fight back and fend off this acquisition, and take a new approach to their business and make themselves competitive again.

Michael Arrington from Techcrunch has an interesting analysis on this deal.

Hot on the heels of the $44.6 Billion Offer made by Microsoft to Buy Yahoo, the web is going crazy with discussions on this. This deal if takes place, could well be the defining moment of Internet in 2008. This deal has large ramifications, beyond just about you and me can think of.

I’m not entirely sure, if this deal makes sense for Microsoft. The only reason Microsoft seems to be running behind Yahoo is to beat Google in Search and Online Advertising. The Bid seems to be a good deal for Yahoo, since the company has virtually been struggling for the past four years and 62% premium on the current value seems to be a good deal for the shareholders.

But it raises some obvious questions. Every Acquisition has always had one side loosing itself. Take for example Google’s recent acquisitions. Dodgeball, Jaiku, Measure Map etc.. All these companies had to suffer the wrath of Google. But take Youtube, it was a competitor to Google Video at the time it was purchased, and Google had to take some tough decisions on what it should do with Google Video. Now we see Youtube and Google Video coexisting happily without interfering with each other.

The Question is can Microsoft do this. For long we’ve known Microsoft to be a monopolistic company, with bigger than life interests. Let me ask you some questions here. I’d want all of you to comment on these questions that I’m putting up here..

• Windows Live search or Yahoo search?
• Live messenger or Yahoo messenger?
• Live spaces , Yahoo 360?
• MSN Dating (Match) or Yahoo personal?
• MSN advertising platform or Yahoo advertising platform?
• .NET or JAVA?
• Live ID or Open ID?

Microsoft surely has some tough questions to answer, and speaking with reference to history, I think Microsoft would personally like to stick with its own services. This acquisition also raises questions as to what Microsoft plans to do with the poster childs of Web 2.0 namely Flickr and Del.icio.us. It would do more harm than good to play around with them.

There is also one more thing that the Yahoo Board would have to consider incase they decide to go ahead with this deal. A lot more people could be loosing their jobs at Yahoo, considering the amount of overlap in the services that the two internet giants offer and with the parent company that is Microsoft giving preference to its own properties over Yahoo’s inspite of Yahoo Services being more popular.

In my belief the deal is not a good idea for the whole Internet as well. Microsoft has for long shed away from promoting Open Source and we all know that Open Source is the future of the Internet and proprietary technologies like ASP will never work. And what’s even more important is that Yahoo has been ramping up on the use of Open Source Technologies with services like Flickr, Zimbra, Del.icio.us. So that’s again a point of differing interests of the two companies.

I don’t think a combination of Yahoo and Microsoft is going to reverse Google’s increasing search dominance. As Terry Semel said in 2006:

My impartial advice to Microsoft is that you have no chance. The search business has been formed.

He’s pretty much right, the search game is pretty much sealed, and Microsoft doesn’t have much of a chance here. Acquiring Yahoo would mean a lot of conflicts for Microsoft and its own services and its own technologies.

All in all I don’ think this deal holds value for either Yahoo and Microsoft, except this is probably the answer to all the struggles Yahoo has put up with its Finances and Stock. Yahoo gets a boatload of money if this deal gets through and looses its identity that it has built up over the years. And What does Microsoft get, nothing at all. There is no way Microsoft can defeat Google by acquiring Yahoo simply because conflicts in the interests of the two companies is one too many.

What do you think about this deal? Yahoo still hasn’t said a Yes or No to the deal and their board must be taking some decisions as I speak. But all in all if this deal goes through, Yahoo would be the biggest looser and Google would only become stronger.

Please Yahoo, please say No. I don’t want any of the services that have come to define the Internet to die at the hands of Oppressive Microsoft. Please live on, and Live Free and I’m sure you’d be able to get past all your recent troubles.

Please voice your opinions on this deal in the comments. We all need to discuss this, as it could forever change the landscape of the Internet.

Image Credit : Mashable