Yahoo rejects Microsoft's offer

It wasn't even a business day when word began to spread that Yahoo had rejected Microsoft's $44.6 billion bid. Yahoo didn't think that the $31 per share offer was nearly enough, according to several news reports on Saturday, Feb. 9th. You might ask just how much is enough when an offer is in the double-digit billions?

It doesn't really matter. This chase could go on for months. Just look how look at how long it took Oracle to win BEA a few months back. Oracle gave a little bit more and got BEA in the final deal. The bigger issue is what can Microsoft get from this possible merger? The answer is plenty. An article in The New York Times on Saturday said that Yahoo would be able to provide the audience and the infrastructure for Microsoft to compete in the world of low-cost Internet-centered software.

"Microsoft makes its money selling licenses to millions and millions of people who install it on individual hard drives," said Nicholas Carr, a former editor at The Harvard Business Review and author of The Big Switch, a book about the transition to what the technology industry calls 'cloud computing.' "Most of what you need is on the Internet - and it's free," he said. "There are early warning signs that the traditional Microsoft programs are losing their grip."

While consumers are likely to gravitate toward free software, most of Microsoft's profit comes from selling software to corporations, which may be slower to adapt to a system in which proprietary data is not stored in corporate-owned data centers. This could change and CIO's must be on the alert to take advantage of these emerging opportunities. It's too soon to bet the bank on how this highly-charged merger initiative will turn out but just because Yahoo rejected its suitor doesn't mean the romance is over or that change is not in the cards.

For more on this high-stakes bid and its consequences:
- See this New York Times article
- and this Washington Post article