Yahoo doesn’t really want to be owned by Microsoft.  And who can blame them?  I know I don’t want to be owned by Microsoft.  A Microsoft takeover of Yahoo will almost certainly mean a loss of a lot of jobs, as divisions get merged and rolled together.  And Yahoo has always seen Microsoft as competition, so there’s some underlying dislike there already. 

Yahoo’s CEO sent a memo out to his troops, detailing the current status.  He says:

“Our board is thoughtfully evaluating a wide range of potential strategic alternatives in what is a complex and evolving landscape.”

Translation:  “We’re desperately trying to find some non-Microsoft company to buy us out instead, but time is running out.” Rumors swirl that Yahoo put out feelers to the likes of Google, NewsCorp, AOL, and even Comcast… to gauge possible interest in one of those behemoths taking them over instead of Microsoft.  It’s like in school, when I was a big nerd, and allowing myself to be bullied by one guy meant that all the other bullies would leave me alone.  The lesser of two evils, if you will. 

Yahoo just doesn’t have many options.  They’re already cutting jobs and losing profits.  I’m no economics professor (at least, not anymore I’m not), but Microsoft timed their offer rather perfectly.  From the article:

If Yahoo rejects Microsoft, most analysts believe the company will have to line up another acquisition offer or make radical changes to satisfy disillusioned shareholders.  But most analysts doubt any other potential suitor will have the financial muscle — or desire — to try to outbid Microsoft, which has $21 billion in cash and a market value of nearly $265 billion.

If Yahoo spurns Microsoft’s advances, and doesn’t find another company to buy them, they will now likely face a lot of angry stockholders who might wonder why.  As this article states:

If it spurns Microsoft’s offer, Yahoo’s board of directors will be under pressure to give stockholders a soothing cash payout or even borrow money to buy back shares and turn the firm private.

So, Yahoo is backed into a corner.  They have to do something.  And so far, none of the other bullies have stepped up to plop down the billions.  One thought I read a lot about is that Yahoo–whose search used to be powered by Google as recently as 2004–might turn over it’s search operations to Google again, cutting enough costs in the process to allow them to stay independent.  But Yahoo worked hard enough for years to develop their own search division–to compete with Google–that just reverting to the past would seem like a giant step back. 

Google, you may know, is vehemently against this merger.  Cue the chorus of “Duh” from the peanut gallery.  A Microsoft/Yahoo merger means a huge new competitor for Google’s dominance in search, and Google knows it.  MicroHoo (or YahooSoft) would also be a company bolstered in the area of online advertising–another market Google has a bit of dominance in.  I’m not sure Google’s argument that this merger hinders an open, competitive web holds any water (especially when compared with the numerous acquisitions and mergers Google themselves are guilty of. 

We’ll keep you posted.  Just know that one way or another, Yahoo as we know it is going to change.  My money’s on the merger going through.  And while Yahoo and Google may not prefer that, I do think the end result to us users is a good one.  A significant competitor in search can only mean better search service for all us computer users out here in the real world.