The business stories that matter, by Fortune's Colin Barr
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February 4, 2008, 10:41 am

How Yahoo could escape Microsoft

Yahoo (YHOO) rose 2% early Monday as investors continue to mull over Microsoft’s (MSFT) $44.6 billion unsolicited bid for the struggling Net giant. Completing the deal would take Microsoft into uncharted territory, Bloomberg reports, with the prospect of the cash-rich software titan’s first-ever debt sale. Not everyone expects to see Microsoft bonds anytime soon, though. Venture capitalist Fred Wilson writes that Yahoo could easily escape Microsoft’s clutches by outsourcing its search business to Google (GOOG), spinning off its overseas business holdings to shareholders and splitting up the rest of the company in some fashion. Fortune’s Adam Lashinsky writes that Yahoo could try to find a partner in the media or among overseas telcos - or perhaps even with sovereign wealth funds - though he wonders if management and the board are up to the task. Whatever happens, it seems no one expects to see Yahoo standing alone as a public company by the end of 2008.

$31 a share would be a cheap sale for Yahoo. Is it a good marriage for Microsoft? I would like to see yahoo’s board and management demonstrate some capability and not act desperately. Will Microsoft and Yahoo be able to leverage strength from the other party such as brand, user base, search technology, management /business savvy and create a win-win relationship? Internet and Search is big enough for a few players. Healthy competition is good for everyone.

Posted By W Hwung, Pleasanton, CA : February 4, 2008 12:27 pm

No, this takeover by Microsoft would not benefit the consumer. Microsoft is like a bizarro King Midas — everything it touches turns to lead.

Posted By FutureUser, Nashville, TN : February 4, 2008 11:48 am

So glad someone finally said this… why would they want to “escape” Microsoft. This would benefit everyone. The only company with an axe to grind here is Google who should either make a conter offer or stop whining.

Posted By TR, Long Beach, NY : February 4, 2008 11:43 am

Why would Yahoo! want to “escape” Microsoft? The deal would benefit everyone involved: Microsoft, Yahoo!, and the people who make it all possible - the average consumer.

Posted By Ken, Atlanta, GA : February 4, 2008 11:21 am
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Colin Barr covers business and finance for Fortune.com. Previously he was an editor at TheStreet.com and author of the weekly Five Dumbest Things on Wall Street column, and an editor at Dow Jones Newswires.
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