Traditionally, Microsoft’s core business has been focused on the Windows platform and the Office suite. Windows and Office, by all means, continue to be the heart of Microsoft. The latest versions of the flagship products, Windows Vista and the Office 2007 System, made available to the public at the end of January 2007, have fueled the vast majority of the company’s most recent fiscal second quarter record financial results of $16.37 billion in revenue, and $6.48 billion in operating income. With Office SP1 out of the way at the end of 2007, Microsoft is currently building Windows Vista Service Pack 1, Windows XP Service Pack 3 and Windows 7 client platforms, as well as putting the finishing touches on Windows Server 2008.

But on February 1st, 2008, the Redmond company managed to steal the show away from its flagship products with the $44.6 billion cash and stock unsolicited acquisition proposal directed at Yahoo. Enjoying a continual near-monopoly on the desktop with Windows and Office, and pushing hard on the server side with the new lineup of Windows Server, SQL Server, ISS7 and PHP against Linux, Apache, MySQL and PHP, and with the entertainment division starting to pick up steam, Microsoft is now turning to the Internet. In the Cloud, the Redmond company is the indisputable underdog. And with the rival Internet giant from Mountain View hugging the online advertising and search engine markets, Microsoft is now doing a tad of hugging itself: bear hugging. Microsoft has been looking to acquire Yahoo since the end of 2006, but has been repeatedly shut down. And All Because of Google”We have been engaged in conversations with Yahoo! management off and on for the last 18 months. Last night I called Jerry Yang to discuss our proposal.

This is a proposal we believe to be a very good deal for Yahoo! shareholders and an offer we want them to think about seriously, to be excited about, and particularly to have the Yahoo! employees be very, very excited about,” stated Microsoft Chief Executive Officer, Steve Ballmer.”A year ago the Yahoo! management team told us it wasn’t really the right time to discuss an acquisition. We believed then in the benefits of combining the two companies and we believe now in those benefits more than ever. That is why we are making it public today so both sets of shareholders, employees and customers can understand the incredible opportunity in a combination of Microsoft and Yahoo!. This is a decision we have thought and I personally have thought long and hard about. And we are very, very confident it is the right path for Microsoft and for Yahoo!,” Ballmer added. Microsoft going public with the offer means that all private negotiations have failed to the extent that the Redmond company now feels that it’s the right time to apply pressure on Yahoo’s Board of Directors to consider their proposal. The tactic of delivering an unsolicited acquisition bid in order to force a public company to consider a takeover offer is referred to as a “bear hug”. And the soil couldn’t be more fertile for Microsoft, as Yahoo is now squeezed tight in between the $44.6 billion offer, and its falling profits, eroding search engine market share, audience and layoff perspectives. And make no mistake about it. Microsoft did not just all of a sudden decide to take a close affinity to Yahoo. The $44.6 billion bid has been fermenting for almost two years. The unsolicited acquisition proposal is nothing more than the latest step in a ballet debuted at the end of 2006, and that is far from finishing whether Yahoo will say yes, or no. And all because of Google. “Let me just start with the opportunity.

The online advertising industry is a very large industry today at over US$40 billion and it is forecasted to grow quite rapidly to reach nearly $80 billion in the next three years. Online advertising not only represents a significant growth opportunity but it is also a critical element of the business model for monetization of consumer Internet services, Internet services we create and Internet services of our partners,” explained Kevin Johnson, President, Platform & Services Division. The Art of Biting off More than You Can Chew, Swallowing It without Chocking and Digesting It WholeIn the eventuality that Yahoo will agree to be swallowed by Microsoft, the Redmond company is in for quite a digestion. There are more aspects to Yahoo than meet the eye. There are for example the Sunnyvale’s company’s datacenters and server farms running for the most part open source software, an infrastructure that will have to be married with Microsoft’s own Windows oriented backbone. Then, there is Yahoo.com with the adjacent portals, Yahoo ID, Yahoo Games, Yahoo Maps, Yahoo Messenger, Yahoo Mail, Flickr, 360°….

source:news.softpedia.com
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