Oh, Microsoft, your share repurchase plan isn't working. Your stock is still flat, despite returning billions of dollars to investors since July 2004. So what next? The
Financial Times suggests
buying growth instead. Yahoo, the world's largest Internet portal, is one obvious target. The Internet portal sits squarely in the hole Microsoft needs to fill, the newspaper claims. A combined
Microsoft and Yahoo would instantly and significantly close the big gap separating Google from the rest. According to comScore, the combined companies would have 42 percent of U.S. queries compared
with Google's 44 percent. Yahoo is also more than just search. As a portal, it excels where MSN has failed, and it could combine its market leadership in display with MSN's adCenter. "Conceptually,
Yahoo's media savvy and ability to woo internet traffic would complement Microsoft's technology expertise," the paper notes. The combined companies would also become the market leader in email and
instant messaging. However, regulators--and Microsoft knows this--would balk at Microsoft creating a near-duopoly in Internet search, and a near-monopoly in portal services. Other negatives: there
could be a culture clash between Redmond, Wash.-based Microsoft and Sunnyvale, California's Yahoo. There could also be a user backlash. But how much would Yahoo cost? Billions, which is why an
acquisition remains unlikely. But Microsoft has tons of cash, and could be forced into using it if it continues to lose ground to Google.
Read the whole story at Financial Times »
