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Wednesday, February 06, 2008

Microsoft bids N4.9tn for Yahoo!

Information Technology (IT) giant, Microsoft Corporation may have intensified its battle against competition, especially Google Inc, as the Bill Gates-led company bided $42 billion (about N4,979,520,000,00 trillion) in its desire to takeover Yahoo Incorporated.

Reports at the weekend informed that the figure bided were orchestrated because of Microsoft’s inability to topple Google single-handedly.

According to AP reports, Microsoft Corp embarked on this trip in efforts to force crippled rival Yahoo Inc. into what industry analysts foresaw as short-lived affair, dangling about $42 billion before Yahoo for a chance to combat the likes of Google, mostly on being better positioned as leader in Internet search engines.

Also, Microsoft’s audacious attempt to buy Yahoo, AP reported, spelled out in an unsolicited offer announced last Friday, showing just how much Google threatens the world’s largest software maker’s grip on the people interaction with computers.

Equally it was proclaimed that for Yahoo, the bid represents another painful reminder of how missed opportunities and mismanagement combined to open the door for Google to supplant it as the Internet’s main gateway, decimating its stock price in the process.

Redmond, Washington-based Microsoft is trying to avoid a similar fate at Google’s hands as more people access services and computer programmes online instead of relying on packaged software applications.

Although Microsoft remains the world’s most valuable technology company, its position will become intensively unstable unless it cultivates more loyal Internet audience globally, thereby generating more online revenue through advertisement, so as to keep the pace in subsidized free services.

Microsoft is acutely aware of the upheaval that can be caused by a pivotal shift in technology, having been the biggest beneficiary during the 1980s and 1990s of a transition from mainframe computers to personal computers that knocked IBM Corp. off its pedestal.

Sunnyvale-based Yahoo was reported to be reserved on the announcement by Microsoft until it studies the bid, carefully and promptly.

But in a press conference Friday, Microsoft Chief Executive, Mr. Steve Ballmer, showed he won’t take no for an answer after Yahoo rebuffed takeover overtures a year ago.

“This is a decision we have -- and I have -- thought long and hard about,” Ballmer said. “We’re confident it’s the right path for Microsoft and Yahoo.”

Yahoo will likely face intense pressure to accept, given its steadily sliding profits and a murky 2008 outlook that caused its stock price to drop to a four-year low earlier this week.

Industry watchers said that Microsoft’s $31-per-share offer originally valued at $44.6 billion represents a 62 per cent premium to Yahoo’s closing price late Thursday, despite it’s below Yahoo’s 52-week high of $34.08 which reached less than four months ago.

On Friday, the total value of the cash-and-stock deal fell to $41.7 billion, or $28.95 per share, because Microsoft’s shares declined on the news.

Yahoo shares soared to a split-adjusted high of $118.75 in 2000 before the dot-com bust. That peak coincidentally also was just before Yahoo gave Google its first big break by hiring it to run its search engine.

Experts described search engines as crucial tools because they have become a central hub in hugely profitable ad networks.

Reports have it that advertisers around the world are expected to double their spending on the Internet during the next three years as more people get their news and entertainment on the Web instead of television, radio, newspapers and magazines.

The trend is expected to create an $80 billion online ad market in 2010, up from an estimated $40 billion last year.

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