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Fri Feb 1 2008 08:43:17

Microsoft Bids $44.6 Billion for Yahoo

By: Ina Steiner

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Contrary to some pundits' predictions, it appears Yahoo will not acquire eBay. This just in: Microsoft offered to buy Yahoo. From the press release: Microsoft Corp. announced it has made a proposal to the Yahoo! Inc. Board of Directors to acquire all the outstanding shares of Yahoo! common stock for per share consideration of $31 representing a total equity value of approximately $44.6 billion. Microsoft's proposal would allow the Yahoo! shareholders to elect to receive cash or a fixed number of shares of Microsoft common stock, with the total consideration payable to Yahoo! shareholders consisting of one-half cash and one-half Microsoft common stock. The offer represents a 62 percent premium above the closing price of Yahoo! common stock on Jan. 31, 2008.

The move is clearly aimed at competing with Google - again from the press release: The online advertising market is growing at a very fast pace, from over $40 billion in 2007 to nearly $80 billion by 2010. The resulting benefits of scale along with the associated capital costs for advertising platform providers make this a time of industry consolidation and convergence. Today this market is increasingly dominated by one player. Together, Microsoft and Yahoo! can offer a competitive choice while better fulfilling the needs of customers and partners.

Expect layoffs (see "elimination of redundant cost"): The combination will create a more efficient company with synergies in four areas: scale economics driven by audience critical mass and increased value for advertisers; combined engineering talent to accelerate innovation; operational efficiencies through elimination of redundant cost; and the ability to innovate in emerging user experiences such as video and mobile. Microsoft believes these four areas will generate at least $1 billion in annual synergy for the combined entity.

As for what it means for eBay, there has been talk for years of an eBay-Yahoo merger or acquisition, now unlikely at least for 2008. It's interesting to note that Yahoo owns a significant stake in Alibaba, which owns Yahoo China, so it could be more bad news for eBay in China.

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by: Ina Steiner

Fri Feb 1 08:48:26 2008

Yahoo issued a response:

Yahoo! Board of Directors to Evaluate Unsolicited Proposal From Microsoft
SUNNYVALE, Calif., Feb 01, 2008 (BUSINESS WIRE) -- Yahoo! Inc. (Nasdaq:YHOO), a leading global Internet company, today said that it has received an unsolicited proposal from Microsoft to acquire the Company. The Company said that its Board of Directors will evaluate this proposal carefully and promptly in the context of Yahoo!'s strategic plans and pursue the best course of action to maximize long-term value for shareholders.

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This user has validated their user name. by:

Fri Feb 1 19:13:07 2008

>>>Yahoo will not acquire eBay.<<<

Does not mean that eBay will not make an offer for Yahoo (even though at this point it would look like a combination of equals).

I've seen crazier things happen (like this week).

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Fri Feb 1 19:17:25 2008

Remember this?

A bidding war for online job site HotJobs ....
Internet portal Yahoo! said it offered US$436 million in cash and stock to buy tHotJobs which in June agreed to be acquired by via TMP Worldwide

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Sat Feb 2 16:10:04 2008

2 weeks ago....

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by: Randy Smythe

Sun Feb 3 13:03:17 2008

A Microsoft/Yahoo combination may be the best thing for online sellers. If Microsoft decides to compete with eBay using Yahoo's ecommerce offerings there may be a bidding war for online merchants.

eBay has already blinked and changed their fee structure (sure it is not a dcrease for everybody but it is for many) Remember what Microsoft did to Netscape and Lotus and Wordperfect.

Also, for the first time Microsoft is sponsoring a Seller conference. The PeSA/ECMTA conference to be held in April will feature Microsoft as a Sponso. Hmm! I wonder why?

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by: Billoment

Mon Feb 4 01:43:42 2008

Randy I agree with you. If this buy out goes through eBay is finally going to have a competitor that will stop at nothing. Yahoo had an auction platform that is still existent in some countries and would not be very difficult to get it back running again in the US. They also have Yahoo Stores. It looks like many people have been crying out for a new vibrant platform and MS has heard. The next year or so is going to be very interesting.


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by: Steve

Tue Feb 5 17:18:39 2008

If you go to Yahoo, the auction platform is still intact.  For instance, the online bulk lister will let you go through every step to post an auction.  Even the last "post auction" step acts like it works, but no auctions are actually posted.

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by: Beth

Wed Feb 6 04:17:26 2008

It will indeed be interesting to watch. I believe the time is right for another financially viable giant to step up to the plate.  (Remember how much we'd all hoped Google would go into the online auction/store business?)

eBay just keeps on gnawing on it's last good foot. It would be very interesting indeed to see MS build up a strong alternative site, then perhaps make a bid for the Bay too?  
I just hope they learn from eBay's errors.

and R.I.P Netscape, which will be officially retired at the end of this month. There will no longer be technical support for it as well, so time for Netscape fans (were there any left?) to adjust and use IE or Mozilla Firefox (which is much more secure than IE).  

Microsoft, we'll be watching you!

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by: Affiliate Marketing Guide

Wed Feb 6 14:45:50 2008

Wow! This is major news.
As everyone is aware Yahoo supports a lot of open source work. Perhaps we are jumping the gun a little. That Microsoft has made an unsolicited bid does not mean that the Yahoo board will accept it. I wonder, if the deal goes ahead, what the implications of this for Yahoo search marketing is

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by: ernestmcd

Fri Feb 8 08:09:29 2008

I read with interest this morning some of the sellers' comments about eBay's recent changes to fees and feedback, and now I see this thread concerning Microsoft's unsolicited offer to buy Yahoo and I'd like to put in my two cents worth.

From 2004 - 2006 I owned and operated In The Zone Auctions which was primarily a consignment eBay auction seller.  My partners and I achieved Silver Power Seller status and 345 Feedback as user ID inthezoneauctions with 100% Positive Feedback selling items large and small.  Biggest single ticket item was a $20,500 semi-truck that also had three trailers which we sold on eBay for about $4500 each.  

I could see the writing on the wall in 2006 and we closed operations then.  eBay's constantly changing fee structure and preferential treatment for buyers made our business far more difficult to operate profitably.  Our expectation was that we would be doing an awful lot of work for very little money in 2007 so we shuttered the doors at the end of 2006 and haven't looked back.

Since then I've been growing a website design and search engine optimization business.  My old website targeted homebuilders here in Atlanta, but my new one coming out this quarter will reflect my evolved market niche:  small businesses that want an affordable website using "leading edge of the technology wave" functionality that will generate sales and leads, and not just be an advertising expense.

My income and client base are growing by referrals, and 2008 is shaping up to be a growth year for me in a recessionary economy. I find niche market work on venues like where I have 100% Positive Feedback as user ID ernestmcd.  Based on my "coder points" there, I'm ranked in the top 1% of over 202,000 coders worldwide  and I'm gaining a reputation for my search marketing skills.  (IMHO eBay could learn a lot about feedback ratings from RentaCoder.)  

Rest assured, there is life after eBay, and their are other places online to sell your products and services.

I suspect that the consolidation of Microsoft and Yahoo (I predict that this deal will go through) will be a good thing for all of us.  It will bring some real competition to Google in the area of Search Marketing and PPC advertising, and with the acquisition of Yahoo auctions, I expect that Microsoft will, in short order, launch a viable competitor to eBay.  I've found that in search marketing, my client's occasional listings of their products on eBay work in coordination with the natural placement landing pages I create for them on their websites, and the carefully structured PPC marketing campaigns we do on Google, Yahoo and MSN to drive more traffic to the client's website.  Result:  more sales on their website, and the few eBay listings bring in the occasional sale but really they're more like an online ad to increase traffic to their website and long term sales there without the hassle of eBay.

Microsoft already knows this, and I expect that by competing with eBay using an enhanced/revised Yahoo Auctions that they'll drive sales volume of their PPC prgrams on the combined Yahoo/MSN AdWords.  If I'm right on this, look for Microsoft/Yahoo to bring out a competitor to PayPal and Google Payment (BTW a very good alternative to the PayPal "Borg").  The market share Google now enjoys will level between the two competitors, and advertising rates will drop.  This will be a good thing across the board.

I suspect that eBay sellers will benefit from this changing marketplace if they have their own website (with shopping cart) off eBay and are prepared to start marketing themselves on the Internet as a viable business entity, and not be content with eBAy's "walled garden".

Thanks for the ongoing commentary on the constantly evolving eBay hegemony, and good luck to all of you in 2008!

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