More details are emerging on round 2 of Yahoo/Microsoft: Instead of a simple straight up acquisition, Microsoft may be able to pull off a deal where they get to pick off just what they want – search – and leave the rest of Yahoo and its troubles behind.
This is a deal that would obviously cost Microsoft much less than a $40+ billion full buyout. And Ballmer could quiet the Microsoft employees and stockholders who were making it known that they hated the original Yahoo deal. At the end of the deal, Microsoft would own Yahoo’s lucrative search and search marketing business, and be a stockholder in the resulting entity. That final version of Yahoo would certainly use Microsoft for at least some of its advertising (Yahoo’s display advertising business may stay with Yahoo).
I suspect a deal will be done quickly – Yahoo’s Yang and supporting board of directors are already being beaten senseless by their own stockholders and they can ill afford another round of incompetence.
If only Yahoo could go back to Febrary 2 and just take Microsoft’s original offer. Everyone but Google would have been better off. In fact, if I were them, I’d be spending half the ongoing negotiations just trying to get Microsoft back to their original offer. Who knows, Ballmer may even go for it.
Also look for Microsoft’s big search announcement on Wednesday at the Advance08 conference.
On Wednesday, we will be announcing a major new initiative that our search teams have been driving. We are getting better and better with our core algorithmic search, and at the same time, we are investing to differentiate in vertical experiences and to disrupt the current model. You’ll hear more about our plans Wednesday.