Microsoft, Yahoo Reconsider Merger | NowPublic News Coverage

Microsoft, Yahoo Reconsider Merger

by babblingdweeb | May 4, 2007 at 07:10 am

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Takeovers and mergers? Wow, talk about an interesting week in Wall Street! We have a possible takeover bid for Reuters, Rupert Murdoch trying to by Dow Jones for $5 Billion and now Microsoft and Yahoo are reconsidering a merger that previously fizzed. Why would they talk now? One word: Google.

The renewed talks are a sign of the continued growth in Google's power and problems over the past year with in-house efforts at Yahoo and Microsoft to ride a boom in Internet advertising. Meanwhile, management changes at both companies could help pave the way for a pairing that a year ago couldn't happen. The talks were first reported in the New York Post. (subscription required)

What do talks of mergers usually do? Usually we see a spike in the stocks of both companies -sometimes a failing in the buyer as it can reflect poorly on financial statements, unless it can help generate immediate revenue. In this case, Yahoo shares increase 17%, Microsoft dropped 1.1% and Google dropped 0.1% this morning (as of 11:05 EDT),

Whether Microsoft and Yahoo can reach an agreement remains as much of a question as it did a year ago. Microsoft has always steered clear of large acquisitions. Yahoo has about 11,700 employees and earlier this week had a market value of about $38 billion. Yahoo shares surged 15% on the Nasdaq Stock Market to $32.42 on news of the talks, raising the company's market value to around $43 billion on Friday. (subscription required)

As of right now, neither company is commenting on the merger.

*Additional information: MarketWatch