• Business Week, Monday, May 7, 2007 12 PM

The Microsoft-Yahoo talks reported by the New York Post on Friday actually took place several months ago. And while a deal might once again be on the backburner, Microsoft is in acquisition mode. company has already splashed out between $1 billion and $1.5 billion on acquisitions this year, including the voice recognition technology provider TellMe, which Bruce Jaffe, Microsoft's vice president of corporate development, says helped boost the company's average acquisition price to more than $60 million this year, underscoring its spending mood.

Microsoft's track record of integrating its more than 150 purchases since 1990 is "spotty" at best. Jaffe replies that because of this, the company has invested heavily in financial, human resources and IT systems to help meld assets together quicker. "The great acquirers have built these," Jaffe says, adding that the company is now well-equipped structurally to integrate a big Web company (read: Yahoo) that would boost its online business, although he doesn't name any names.

A Yahoo acquisition would certainly be a big undertaking. The Web giant has a market value worth some $42 billion, which would make it the largest purchase attempt in Microsoft's history. Short of an outright buy, the Post report claimed the pair could forge a partnership. Either way, the general consensus among industry critics is that both Microsoft and Yahoo need to do something to help them compete with Google.

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