Microsoft and Yahoo!: Close to Signing a Deal or Getting Ugly?

Well, it seems Microsoft is not going to walk away from Yahoo anytime soon, according to numerous articles. To sweeten the deal, Microsoft is evidentially raised its bid to $33 a share, a stout increase from the $29.84 the company was bidding a month ago. Yahoo stockholders are looking for upwards of $37 a share.

While it seems both parties are getting closer in terms of sealing the deal, it’s not as close as the numbers might suggest. For its part, Yahoo is awaiting Microsoft’s decision as it continues to pursue plenty of alternative deals with Google or AOL, both sound options that in many aspects make more sense then merging with Microsoft.

Nor do I think it’s a sign that Microsoft can’t accomplish this through internal development; it’s simply lacking the scale – such as numbers of customers and advertisers – that it needs. Ballmer has openly stated that Microsoft could build its own competitive online-advertising business without acquiring Yahoo, but that it would take longer to accomplish. He’s probably right, but as Oracle has proven so vividly in the past, does purchasing a 2nd place loser really end up being worth its weight in gold in the long run?

I guess only time will tell, but at least a hostile takeover, and the resulting fallout (see below), will make for some great blogging down the road…