• Silicon Alley Insider, Tuesday, November 18, 2008 1:17 PM

As the recession dims the prospects of most big technology firms, Microsoft Corp. remains uniquely positioned to benefit from falling asset prices, says Silicon Alley Insider's Henry Blodget.

"While everyone else hunkers down and fights to survive, Microsoft gets to sit back and decide who to buy." Why? Because Microsoft has a cash hoard of $20 billion it can dip into, which will be nearly replenished this year with $15 billion of free cash flow. No one -- not Google, not Apple -- "will gain this much of a relative advantage from the global economic collapse," Blodget says.

However, before Microsoft goes out and buys whoever it wants, Blodget says the software giant needs to think about building a central consumer brand that it can hang all of its online services on. The Windows Live/MSN/Hotmail mess isn't working, so what the company should do is buy a strong brand name and make everything fall under that brand. Obvious choices are Yahoo, AOL, and Facebook. In fact, Blodget says, Microsoft could probably buy Yahoo, AOL and Facebook today for $20 billion of cash, and then consolidate them under one brand name. That will never happen, but it is possible.

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