• The New York Times, Tuesday, May 6, 2008 11:03 AM

Now that the deal is over, The New York Times' Saul Hansell said that Microsoft and Yahoo now have to show the market that they can thrive independently. And what better way to drum up enthusiasm than a couple of savvy acquisitions? Of course, Hansell admits that its harder to create long-term value in tech companies, and both Microsoft and Yahoo have stumbled with their forward-looking acquisitions in the past: Microsoft through its acquisition of Hotmail, which proved that Webmail isn't a big moneymaker, and Yahoo through its purchases of Overture and Inktomi, which effectively became Yahoo Search, replacing Google as the company's search engine. To a great extent, Hansell said that Yahoo wouldn't be in this mess if it didn't get into search in the first place.

Given the weak economic climate, the advertising market at this point in time also looks "increasingly dicey", Hansell adds, which means that companies are more likely to sell. The big prize is AOL, with its revamped advertising platform and its massive instant messaging audience-but everything else the company has is garbage. Expect both Microsoft and Yahoo to compete for AOL.

Then, "for anyone thinking big," he adds that Facebook "is the free radical on the Web right now." Facebook is attractive for its massive audience, its Web culture cache and its growing, intelligent staff. However, CEO Mark Zuckerberg has made it clear that he wants the company to grow on its own, but if Facebook can't turn its advertising situation around, don't be surprised to see a sale.

Read the whole story at The New York Times »