Evidently, the market didn't agree and neither did Microsoft, which then publicly abandoned that bid for the company. As of this writing, Yahoo's shares are trading at a penny under $22 per share. That's a market capitalization difference of $15.85 billion under Microsoft's last bid.
There are some obvious reasons for Microsoft to want the company: most notably, the oodles of engineering talent that still reside at Yahoo (for how much longer has become a serious question). Yahoo's targeting capabilities, married to Atlas' serving technology and plugged into Drive PM's vast network could make for a display advertising network that delivers more appropriate advertising to larger audiences on a scale that currently only Google has.
As online advertising continues to be a contest between methods based on engagement and analytics-driven targeting, Microsoft combined with Yahoo could compete in a way neither company seems capable of doing alone. Ostensibly selling access to online users instead of basic ad inventory placement will require the kind of powerful analytics Yahoo and Microsoft combined would be capable of. Deploying such analytics meaningfully requires populations of hundreds of millions of online users: A combined company could have provided that.
In May, Carl Icahn, the billionaire corporate raider, purchased 59 million shares and options of Yahoo and launched a proxy fight to turn over the existing board of directors. A senior executive exodus has also begun and a shareholder lawsuit can't be far behind.
Why is this a big story? It portends things to come. It suggests the larger, more mature companies are coming into middle age, where consolidation holds the greatest promise of growth. It means that online is starting to show the strains, not just the signs, of maturity.
2. Yahoo and AOL discuss a merger.
The press began talking about this as early as February, just a week after the Microsoft bid. Techdirt, Techcrunch, and other online industry keyboard waggers were blogging about it up until April, when The Wall Street Journal confirmed it. There's nothing new about this kind of discussion between these two stalwarts of the online advertising universe because there's been this kind of talk before. Dollars weren't discussed, and the conversation looked to be more about a possible merger of equals than anything else.
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