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Last Updated: Friday, 1 February 2008, 16:38 GMT
Web world reacts to Microsoft bid
Yahoo sign, AP
It's not clear yet the direction the merged companies will take

Reaction to Microsoft's bid to buy Yahoo has been swift across the web with analysts, pundits and bloggers poring over the proposal to see how much sense it makes.

Many of the first reactions simply expressed astonishment that Microsoft had launched a bid at all and at the price it is proposing to pay.

In its bid Microsoft said it would be prepared to pay a price 62% above the closing price of Yahoo's shares on Thursday.

"Shocking!" said Tim Smalls, head of US stock trading at brokers Execution LLC.

He added: "The premium seems exorbitant, for what is a dwindling business. I personally don't see how the synergies of Microsoft-Yahoo is going to take on Google."

Search results

"Wow" declared Duncan Riley on TechCrunch and pointed to the letter Microsoft sent to Yahoo's shareholders spelling out why it would be a good deal. Summarising the situation he wrote: "Microsoft + Yahoo = a stronger competitor to the Google borg."

Bill Gates, AFP
The deal has yet to be accepted by the Yahoo board
Many analysts pointed out that Microsoft and Yahoo have struggled to seriously compete with Google on basic web searches. According to analyst firm Comscore Google's sites had a 58.4% share of the search market compared to 22.9% for Yahoo and 9.8% for Microsoft.

Veteran search market analyst Danny Sullivan pointed out the benefits to Microsoft of buying Yahoo to improve this position.

"Search is important, and Microsoft has failed to build much less maintain search share while Yahoo has held steady against Google," he wrote in a wide-ranging analysis.

He pointed out that the deal had not yet been done and the fact that Yahoo was now in play might mean that others, such as IAC (owners of search site Ask) AOL or even Google could make a bid.

Hi-tech lead

Other experts noted the other technologies, apart from search, that Microsoft would acquire if the deal went ahead.

In a blog post Ian Fogg, Jupiter analyst, wrote: "This is being widely reported as an anti-Google move. But in communications -- email, instant messaging/presence, social networks etc. -- a Yahoo - Microsoft combination would be tremendously dominant."

Jerry Yang, AFP
Founder Jerry Yang was brought back to Yahoo to help turn it around
Between them Microsoft and Yahoo have about 400 million users of their respective web e-mail systems - far in excess of the 50 million using GMail.

He added: "Microsoft has the leading IM [Instant Messaging] platform in Europe. The second place varies by country: AOL or Skype or Yahoo but never Google's."

Ben Wood, director of tech research at CCS Insight, said that Yahoo also had expertise in other areas with which Google was only now starting to experiment.

"Yahoo's considerable expertise and assets in online advertising (such as its Panama platform) is relevant both in the fixed and mobile worlds," he said.

"It's notable that Yahoo already had deals with a number of mobile network operators around the world including Vodafone and T-Mobile in the UK," he added.

Finally it was left to Engadget to speculate on what the merged company would be called - provided the deal is approved.

Suggestions included, UnGoogle, Microhoo or Yacrosoft. Leading the pack at the time of writing was Microsoft because, as the survey pointed out, "this ain't no merger of equals".

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