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Microsoft/Yahoo! Merger Would Benefit Both Companies

The Offer Microsoft (MSFT) is offering $41 - $44 billion to acquire internet pioneerYahoo! (YHOO) in order to gain a stronger foothold in internet search marketing. Yahoo! currently holds second position in search marketing, behind Google (GOOG) and ahead of Microsoft, which currently holds fourth place. Yahoo! Inc.  Yahoo! is the one of the biggest & trusted brand name in world of internet.    It is the most visited website in world with nearly 500 million users. Sites like Yahoo! Finance, Sports, and News are category leaders and simultaneously hold the number one spot in terms of both audience size and engagement. Yahoo! Mail, the e-mail services of Yahoo! is a worldwide leader for 10 years. Despite all of this, Yahoo! is lagging behind in financial growth. The primary reason behind this slow growth is a lack of focus on its most lucrative and popular categories like finance, news, sports, mail and, most importantly, search. Strategic shift Lack of focus is a thing of past. Currently the company is paying full attention to its most popular categories and is concentrating on enhancing user experience and thereby increasing user engagement on its website and instead of adding new categories company is increasing its offering under same categories. The most visible example is its video offering. Instead of offering videos as a totally different category, the company has added category related videos on its each category page. For example, one can find out videos related to various financial news/events on Yahoo! finance page. This simple addition not only enhanced the engagement of user with site but also helps to promote video related category. The company has also acquired a more open approach for content offerings. Unlike the earlier, mostly self-contained approach, the company is now offering content from other sites, even from competitors, on its website and thereby offering visitors the most and the best of the web. The company's renewed focus on its popular categories is also visible in its recent buyouts. All buyouts that the company had made the last year are related to its most popular categories (finance, news, sports, mail and search).

Too late ? Many people think Yahoo! has already lost the search marketing battle and will never be able to compete with Google. To some extent it seems to be true, but one must consider the fact that the biggest asset of any website is its users and Yahoo! is still number one in this aspect of business. It was just lack of focus which dragged down the fortunes of the company. Now, with the right focus and clear-cut strategy of growing existing strongholds, the company is all set to evolve not only into the biggest online content provider but also as a strong competitor for search leader Google.

Microsoft and Yahoo Together Now the bigger question is why Microsoft is paying seemingly such a huge amount for Yahoo (way above its market cap at the time of offer). First of all, the market value of a company does not always represent its fundamental value or real business value. Second and most important thing is the future potential of search marketing which is expected to rise from $45 billion currently to about $75 billion by 2010. Despite all of its attempts, Microsoft is still way behind the Google and Yahoo!. By acquiring Yahoo!, Microsoft will not only get the bigger market share in search marketing but also get access to millions and millions of users which are so far near captive to Yahoo for years!. Moreover Microsoft is also expected to save a great deal by creating synergies between Yahoo! and its own search marketing business and also in product development activities. In addition, Yahoo! messenger and MSN messenger will be able to offer lot more to its user communities. Yahoo Valuations At $44 billion, Yahoo! is not expensive. At most it's just reasonable and if the deal goes through it will be one of Microsoft's best acquisitions in its history. Why Yahoo! Should Be Valued Above $44 Billion   Recent strategic shift is expected to put company back on growth path. Even now, when the company's renewed focus is yet to show results, the company is earning nearly $660 million in yearly profits (FY 2007) which gives it a PE ratio of nearly 66. This is not that high for a pioneer company with a strong base and huge future potential. Company holds nearly 40% equity in Alibaba a China based e-commerce site. Although this is not a core business of the company, it holds a lot of promise for the future and, if sold at the current market price, it will give the company a whopping $5 billion. Currently, the company's 36% equity interest in Yahoo! Japan is valued at $7 billion. If one adjusts the valuations of equity interests and net cash that the company holds (cash and cash equivalents + short-term marketable debt securities - debt) Microsoft is actually buying Yahoo! for $31billion, which is very reasonable considering the company's long term strategic shift of its business focus. [click to enlarge] Stakeholders Interest The possibility of a deal has already benefited the stakeholders due to a rise in price of Yahoo! shares. In my view, it will be in best interest stakeholders, Yahoo! and Microsoft itself, if Microsoft treats it as independent listed company rather than merging Yahoo with itself. Microsoft should buy strategic, even majority stack in Yahoo! and work on the strengths of both companies. The strength of Yahoo is its user base and its leading position in search marketing, second just to Google. Microsoft can transfer its entire search marketing business to Yahoo! or it can transfer its online content business to Yahoo! and treat it as its online content provider associate or subsidiary, depending on how much Yahoo! stock the company buys. Microsoft's strength is its product development capability and it should take over all product development activities from Yahoo!. This type of arrangement will be benefit everyone.



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For Yahoo! and its stockholders, it will retain its identity of public traded company and allow the market to judge its true valuation. Moreover it will make Yahoo! much more competitive due to increased scale and synergies. For Microsoft it will be a less cash consuming deal as compared to an entire takeover and will also serve its purpose of gaining control of Yahoo! Inc and creating a stronghold in search marketing without initiating a major management reshuffle in Yahoo!. Moreover cash saved can be used to get a good bargain later for any other company because with gloomy outlook of economy much more takeover opportunities are expected to come up in future. How Google Will Be Affected A deal or merger, whatever happens, will only have negative effect on Google, as it will suddenly find its two nearest competitors merging and competing not only with scale but also with lot more operational efficiency. It may also bring in a new era of scarifying of margins to gain clients as both companies Google and the merged entity (Microsoft/Yahoo!) has enough financial strength to do so.

http://seekingalpha.com/article/63565-microsoft-yahoo-merger-would-benefit-bothcompanies

Microsoft Bids $44.6 Billion for Yahoo
AN FRANCISCO — In a bold move to counter Google’s online preeminence, Microsoft said Friday that it had made an unsolicited offer to buy Yahoo for about $44.6 billion in a mix of cash and stock. If consummated, the deal would redraw the competitive landscape in Internet consumer services, where both Microsoft and Yahoo have both struggled to compete with Google. The offer of $31 a share represents a 62 percent premium over Yahoo’s closing stock price of $19.18 on Thursday. It would be Microsoft’s largest acquisition ever. Microsoft said the combination of the two companies would create efficiencies that would save approximately $1 billion annually. The software giant also said that it had an integration plan to include employees of both companies and intends to offer incentives to retain Yahoo employees. Steven A. Ballmer, the Microsoft chief executive, said that he called his Yahoo counterpart, Jerry Yang, on Thursday night to tell him that Microsoft intended to bid on the company, and that they had a substantive discussion. “I wouldn’t call it a courtesy call,” he said in an interview. Mr. Ballmer said he had decided to pursue a takeover because friendly deal negotiations would most likely be protracted and would probably become public. “These things are hard to keep quiet in the best of times,” he said. He said his conversation with Mr. Yang was constructive, but suggested that a deal may not come easily. Yahoo said in a news release Friday that its board would evaluate Microsoft’s bid “carefully and promptly in the context of Yahoo’s strategic plans.” In a letter to Yahoo’s board, Mr. Ballmer wrote that the two companies discussed a possible merger, as well as other ways to work together, in late 2006 and 2007. Mr. Ballmer said that in February 2007, Yahoo decided to end the merger discussions because its board was confident in the company’s “potential upside.” “A year has gone by, and the competitive situation has not improved,” Mr. Ballmer wrote.

As a result, he said, “while a commercial partnership may have made sense at one time, Microsoft believes that the only alternative now is the combination of Microsoft and Yahoo that we are proposing.” Mr. Ballmer met several times in late 2006 and 2007 with Terry S. Semel, then Yahoo’s chief executive, people involved in the talks said. While the talks — originally focused on the prospect of a merger or a joint venture — were initially constructive and appeared to move forward, they quickly broke down, these people said. After a series of secret meetings between both sides in hotels around California and elsewhere, Mr. Semel and Yahoo’s board decided against progressing with the talks, betting that its stock would turn around as it introduced a new advertising system called Panama, these people said. Mr. Yang, in particular, was adamantly against selling the company to Microsoft and championed the view of remaining independent, they added. Mr. Ballmer constantly consulted with Bill Gates, the Microsoft chairman, about the progress of the negotiations, people close to the company said, and when the talks collapsed, he decided to wait to see the fate of Yahoo’s stock price. As the stock continued to fall, they said, Microsoft’s management became emboldened and began internal meeting in late 2007 about the prospect of making a hostile bid. Despite their heavy investments in online services, both Yahoo and Microsoft have watched Google extend its dominance over Internet search and the lucrative online advertising business that goes along with it. “No one can compete with Google on their own any more,” said Jon Miller, the former chairman and chief executive of AOL. “There has to be consolidation among the major players. It has been a long time coming, and now it is here.” In recent months, Yahoo has struggled to develop a plan to turn around the company under Mr. Yang, its co-founder, who was appointed chief executive amid growing shareholder dissatisfaction last June. Yahoo investors, however, remain skeptical. The company’s shares have slumped, and the closing price on Thursday was 44 percent below its 52-week high. Yahoo’s shares closed Friday up 48 percent, to $28.38. Microsoft’s shares were down nearly 7 percent, and Google’s shares declined nearly 9 percent.

Microsoft, like Yahoo, has faced an uphill battle against Google. The company invested heavily to build its own search engine and advertising technology. Last year, it spent $6 billion to acquire the online advertising specialist aQuantive. Microsoft’s online services unit has been growing, but remains unprofitable. Meanwhile, Google’s share of the search market and of the overall online advertising business has continued to grow. Announcing its quarterly earnings earlier this week, Yahoo said it would cut 1,000 jobs in an effort to refocus the company and reduce spending, and issued an outlook for 2008 that disappointed investors. The timing of Microsoft’s bid could allow the company to mount a proxy contest for control of Yahoo’s board should it try to dismiss the offer. Microsoft has discussed the prospect of mounting such a campaign, people close to the company said, and has until March 13 to propose a slate. In his letter to Yahoo’s board, Mr. Ballmer wrote, “Depending on the nature of your response, Microsoft reserves the right to pursue all necessary steps to ensure that Yahoo’s shareholders are provided with the opportunity to realize the value inherent in our proposal.” On Thursday night, Yahoo announced that Mr. Semel, its nonexecutive chairman and former chief executive, was leaving the board. Under Mr. Semel, a long-time Hollywood studio executive who ran Yahoo from 2001 to 2007, the company became more focused on its advertising and media businesses, but was unable to keep up with Google’s challenge in Web search and advertising and with the rise of social networking sites such as MySpace and Facebook. A longtime board member, Roy J. Bostock, has been named nonexecutive chairman, Yahoo said. Microsoft said it believes the Yahoo transaction could receive the necessary regulatory approvals in time to close by the second half of this year. Miguel Helft reported from San Francisco, and Andrew Ross Sorkin from New York

http://www.nytimes.com/2008/02/01/technology/01cndsubyahoo.html

Microsoft Unlikely to Raise Yahoo Offer
By MATTHEW KARNITSCHNIG

Microsoft Corp. is preparing to lay a long siege. Two months after Microsoft made its $44.6 billion offer to acquire Yahoo Inc., the software maker has no plans to raise its bid, people close to the company say. Such pronouncements are standard in deal negotiations but people close to Microsoft insist the stance isn't posturing. While speculation has swirled that Microsoft was poised to raise its bid, Microsoft is instead biding its time. The software giant likely hopes to use the potential of a sweetened offer to lure Yahoo into serious discussions. So far the two sides have only had one meeting. "There's no reason to bid against ourselves," one of these people said. Microsoft's strategists believe that time is on their side, the people close to the company say. The strategists argue that Yahoo's recent roadshow failed to dazzle investors and nothing in its presentations will justify a higher price, the people say. In addition, the strategists argue that the worsening economic downturn and stock-market weakness make the original bid look even more generous. Other people familiar with Microsoft's thinking say the company has no immediate plans to nominate a slate of directors to replace Yahoo's current directors. Last month, Yahoo said it amended its bylaws to extend the deadline for nominating new board members. The deadline is now moved to 10 days following Yahoo's public announcement of the date of its 2008 shareholders meeting. The date of that meeting hasn't been set, nor has it been established when the meeting date will be announced. Yahoo formally rejected Microsoft's unsolicited offer on Feb. 10, saying it "substantially undervalues" the Internet company. Though Microsoft's cash-and-stock bid was initially worth nearly $45 billion, a decline in Microsoft's shares has lowered the offer's value to about $42 billion, or $29.25 a share. Yahoo shares closed at $28.93 in 4 p.m. trading on the Nasdaq market on Monday. People close to Yahoo have suggested that a $40 a share offer would be acceptable, but many in the market are counting on an offer in the mid-$30 range.

Microsoft's harder line comes after Yahoo and Time Warner Inc. recently stepped up talks over creating an alternative to Microsoft's offer. The talks center on a deal that would fold Time Warner's AOL Internet unit into Yahoo. But people familiar with the matter said they continue to regard a deal with Microsoft as the most likely outcome because of the complicated nature of the proposed partnerships and the reluctance of Time Warner and others to confront Microsoft. News Corp. and Yahoo have been discussing an alternative deal whereby News Corp. would gain a stake in Yahoo in exchange for selling it MySpace and some other Web sites. News Corp. owns Dow Jones & Co., publisher of The Wall Street Journal.

http://online.wsj.com/article/SB120701820580579519.html

Microsoft to power Yahoo search; long-term benefits to Yahoo invisible
All the money Yahoo ever spent on refining its search product - which still led Microsoft for market share - has just been flushed down the toilet. What does Yahoo get in return? Nothing tangible. Microsoft, by contrast, does



Worldwide search engine share July 2009 global: Google far ahead of Bing or Yahoo. Source: Statcounter So Microsoft finally got the piece of Yahoo it really wanted. It's going to power Yahoo's search and Yahoo's ad team is going to sell the advertising on it - though Microsoft's AdCenter system is going to handle the self-service advertising sales (and self-service is a huge part of ad sales for search engines, at least with Google; expect the same to happen with Yahoosoft). It's a 10-year deal. That is enough to comfort the markets. But it should have people inside Yahoo shivering. As BusinessWeek puts it, "Yahoo gives in to Microsoft, gives up on search". That's not of course how it's being presented on the joint page at the bizarrely-named "choicevalueinnovation.com" website. (Does that mean we have to choose between value and innovation?) According to the pair, it is an agreement that will improve the Web search experience for users and advertisers, and deliver sustained innovation to the industry. How's that? In simple terms, Microsoft will now power Yahoo! search while Yahoo! will become the exclusive worldwide relationship sales force for both companies' premium search advertisers Oh, sure, premium search. Expect this: premium search will be a shrinking part of advertising, both in number and in value. More and more it is going to be done through self-service systems. The reason: automation scales. Humans are pricey; machines keep getting cheaper all the time. The problem for Yahoo though is that it's now going to be simply a front page - but what happens to everything built on it? What happens (as Simon Willison, a developer at the Guardian, asked) to third-party products built against Yahoo's search API? They'll now build against Bing's API - if they decide to stick with Yahoo. But why would they? Is the Flickr API or Yahoo Pipes going to be the next thing to get absorbed, or cast off by Yahoo as it struggles to contain costs?

Yahoo was already in trouble given that Microsoft had passed it for search share a couple of times in June and July in the US - although worldwide, it hasn't quite passed it. Note too that Google sits right up there with about 90% of worldwide search share, according to Stacounter. Together, Yahoo/Bing had about 8% share. There's no going back now; Yahoo isn't, in 10 years' time, going to wake up and decide that it doesn't like Microsoft's search after all, and re-build a new search engine. All that money Yahoo ever spent on search has just been flushed down the toilet. Look at what happened to AOL: Google got to power its search (because AOL was always about content, not finding content). This week, Google sold back the 5% stake in AOL that it bought for $1bn in 2005, beating Microsoft to the deal; Google bought it then so that it could grow its market share. At the time I wrote that the importance of that was to make sure that Google didn't suffer the same fate as Netscape had. Three and a half years later, AOL is being spun off by Time-Warner, so Google has had to sell back the shares. And now AOL gets to be ... the company that doesn't have any value: Google lost about $750m on the shares - but you can be sure that its own value has grown far, far more. At Yahoo, Microsoft, meanwhile, gets to take over the underlying process that we all know is key. Is the revitalised, expanded Bing going to start stealing from that 90% share? Ignore the advertising angle, because people aren't going to come to a search engine just because the advertising's better there. The question is, will you go there? Do you go there? Do you use Yahoo's search? Most people don't. "Unfortunately there will be some redundancies at Yahoo..." says Bartz. "But it's over the next two and a half years... So there will be redundancies but it's all in the future." The suspicion is that Yahoo, like AOL, is going to find itself hollowed out. Bartz in the phone call emphasised that, freed of the tedious binds of having to run a search engine, Yahoo can focus on "mobile". Um, sure. As the analyst Michael Gartenberg put it succinctly (yes, <140char): Q: What do you get when you cross Yahoo with Microsoft? A: Microsoft. Can you see any future for Yahoo? If so, do tell how

http://www.guardian.co.uk/technology/blog/2009/jul/29/microsoft-yahoo-search-analysis

Top 10 Tips to Develop a Search Engine Friendly Website

Search engine optimization or SEO is a way to improve more traffic for a website from different top search engines like Google, Yahoo, Bing, MSN etc. Great website design is very important for an online business. If a website does not have good search rankings then less people come to your site. You have to learn some basic SEO principles to avoid having a website that is not search engine friendly. If you are planning to develop a website for your business then you should know about how to develop a search engine friendly website. In this article I am going to show you 10 best tips will that help you to build SEO friendly website. 1. Keyword research or analysis is the first step in a Search Engine Optimization process. Find out the appropriate keywords used by people to website. You can make use of Google Adword Keyword Search Tool for getting highly searchable keywords in your niche. 2. You must ensure that all of your website url format should be remember easily, because if your website contains lots of questions marks and session ids then it is difficult to index your site. 3. Try to put unique title, Meta keywords and Meta description in every page of your website. The title and Meta tags section should not be same to other pages of a website. 4. Create latest HTML and XML sitemap for your website. The HTML sitemaps are mainly used by website readers to view your website contents where as the XML sitemap is used for search engine crawling. You can submit your website sitemap in all search engines. 5. If do not want some URLs of your website to be index by search engines then just create a robots.txt file in the root folder of your website and point out the list of URLs which you want to block from search engines indexing. 6. Create a custom 404 page on your site for non accessible requests. You can sponsor some of your website pages by 404 error page. 7. Use heading tags properly on your website pages. The H2 tag should be used after H1 tag. Also check out your website properly for any kind of broken links and resolves it as soon as possible. 8. Build a website with easy and understandable code, so that your website becomes search engine friendly. Use latest technologies for developing a website like Cascading Style Sheets (CSS) to reduce the amount of formatting in the HTML code. Search engine like pure content. So, remove formatting from your site. 9. Always try to create good content and keep up to date. Search engines love websites like blogs as these are regularly refreshed. Good and relevant content attracts the visitors more. So it is said that content is a king for SEO friendly website.

10. Use web analytics program to track your website progress in search engines. You can get more option to use like Google Analytics. It is very easy to use and versatile. Through web analytics you can know how people interact with your site and how much traffic you get from search engine and other sites

http://www.wannaseo.com/top-10-tips-to-develop-a-search-engine-friendly-website/

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