Microsoft Seriously Considering Yahoo! Acquisition

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Yahoo! is in a precarious position, business-wise. With its stock value stagnating and a management crisis, the company is looking into ways to revitalize its business. Will a Microsoft acquisition be the spark that Yahoo! needs to get back in its game?

Microsoft and Yahoo! have an interesting past. In 2008, Microsoft made an unsolicited offer to acquire Yahoo! for $44.6 billion, in what was viewed as a hostile takeover attempt. Yahoo! successfully staved off the buyout attempt. But with Yahoo!’s market value plunging down to well below $17 billion since then, investors and management are wondering whether the decision to reject Microsoft’s offer back then was a good idea.

Yahoo! has recently been sending mixed signals about where the company will be going moving forward. Co-founder and former CEO Jerry Yang has initially assured employees that the company was not for sale. However, he was more recently quoted to say that the company is considering all its options.

With Yahoo! getting offers from interested parties, Microsoft was reportedly among the companies considering to acquire Yahoo! Other interested parties include China’s Alibaba and a consortium led by Netscape founder Marc Andreessen. Just recently, sources cited by Reuters say Microsoft is now seriously considering to buy Yahoo!, word of which was said to have driven both Microsoft and Yahoo! stock up — a signal that the market might find this an ideal situation.

Microsoft’s management and investors still have mixed feelings about a potential acquisition, though. One faction wants the deal to push through, believing that a Microsoft and Yahoo! partnership will result in a strong web portal that can dominate against the likes of AOP. Meanwhile, another group thinks that Yahoo! does not have enough growth potential to merit an acquisition. “Yahoo’s value hasn’t grown in years, and some executives feel we should buy something that is more forward-looking,” says a Microsoft executive who wants to remain anonymous.

What’s to become of Yahoo!? Investors and potential buyers agree that the brand is still strong, although Yahoo!’s assets are not exactly the best in terms of marketability and performance. And what does it mean to consumers and users? Will a Microsoft and Yahoo! partnership result in exciting products and services that can change how we create, share and consume information and content?