In our yesterday's report we sited Times Online story that Microsoft and Yahoo! are again talking about a possible merge that would give Microsoft Yahoo's Search. We remember that a month ago Microsoft's Steve Ballmer said that he is not interested in Yahoo! anymore, or at least now. New reports about Microsoft Yahoo! possible search deal are also raising question based on Carl Icahn's recent moves.
I am extremely skeptical based on Icahn's move. Another, more mathematical reason: Yahoo!'s current market capitalization at its price of $11.51 is $16 billion. How could you spend $20 billion for just a piece of the company?
Still. Barron's interview (subscription required) with Icahn indicated he felt that Yahoo! needs to complete a search deal with Microsoft.
The rejection of the Microsoft offer has, in fact, been called by some the "worst decision ever." It seems like a reasonable offer now would almost certainly be accepted. But will even that sort of deal give Microsoft a leg up on Google?
Update: I was pretty skeptical, as I wrote above. Multiple sources have confirmed with no less than Levinsohn himself that it's pure fiction.
However, the Icahn buy alone would prevent such a deal from going forward, unless he wants to join Mark Cuban in the SEC's doghouse.
Therefore, where did the Times Online get this info? The original story didn't even cite "anonymous sources." At any rate, many believe this sort of deal is what Yahoo! needs to survive. Still more to come.
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