Yahoo, Microsoft: Just good friends

Since CEO Steve Ballmer has made clear that he wants to expand, Microsoft's reported interest in buying a stake in Yahoo seems to make a lot of sense as they face the ultimate common enemy in Google. (Blogma, in fact, between the two companies only a few months ago.)

But before we take bets on any names for a merged company (Microhoo?), it helps to review the history of Microsoft's investment portfolio. The company's many large stakes have included $5 billion in AT&T, $1 billion in Comcast and even $150 million in Apple, as well as an early 10 percent stake in RealNetworks that was later sold.

None of these investments resulted in anything close to a buyout or a merger--and some have even backfired, as in the cases of Apple and Real. What a stake in Yahoo could mean, however, is that Microsoft is simply continuing to , as it is apparently doing with Amazon.

Blog community response:

"If a Microsoft/Yahoo partnership were to happen, I suspect it would be motivated more by frustration than anything. MSN management has been promising for years that they are 'six months' away from catching Google, a window that seems to keep shifting forward."
--Geeking with Greg

"Personally I don't see it happening. While Microsoft may need Yahoo to compete against Google, I don't think it is true the other way around. While I like the competition that Microsoft brings against Google, I certainly would not wish to see them dominate search."
--SearchRank Blog

"Microsoft buying Yahoo would be a disaster--for both companies. Yahoo would disappear inside the Microsoft beast, the talent would leave, the brand would get diluted, the focus would change, and the company would ultimately disintegrate. The smart play, described in today's WSJ's article, would be for Microsoft to give MSN to Yahoo! in exchange for a big equity stake in the combined company."
--Internet Outsider