I 100% agree with John Gruber of Daring Fireball when he says:
“Personally, a merger between the two just seems like a disaster”
Microsoft and Yahoo have the same problem: they are loosing the Internet battleground to Google!
They can’t merger because their businesses overlap:
1) both are leaders for Internet Portal visits. Unfortunately neither has Google’s ability to convert those visits into lucrative searches.
2) both are leaders in messaging systems users
3) both are still leaders in webmail usage, but Gmail is catching up
4) Yahoo’s profits are shrinking. Microsoft’s Internet activity only post losses.
5) both are threatened by Google, but neither has any clue about how to fight back
Two companies with large overlapping businesses merge to reduce workforce, cut expenses and raise profits. They don’t merge to boost growth. Actually it would be a suicide to fire talents that Google would be more than happy to attract.
Actually Pete Cashmore says that talks between Microsoft and Yahoo are not happening.
So why those talks about a Microsoft – Yahoo merger?
I think it is a test for the real thing.
Microsoft wants hints about what may happen if they announce their public offer on Ebay.
Why should Microsoft aim at such an expensive ($42B) incompatible looser, when they can bet Ebay, a total winner at about the same price (46B) ?
Ebay is a great Internet Company. Market leader on:
1) e-commerce
2) on-line payments
3) on-line phone-calls.
Ebay has the ability to turn visits into money. Ebay can fill MSN with advertising that call money. Ebay can stop being Google’s best customer. Skype can become world’s greatest Telecom if embedded into Windows. Paypal can become World’s greatest bank if embedded into Windows…
I already wrote that MSFT should swallow EBAY
Those lousy rumors about Yahoo, may hide the real target of Gates and Ballmer: jucy EBAY!
What does Microsoft know now that they did not kno 2 days ago?
1) When such merger is announced, shares of the target go up 20%… at least. They have to spend EBAY price + 20% hike + 10% premium to make the merger possible… about $60B
2) The public is so impressed by Google’s dominance of the Internet, that a huge merger like MSFT-YHOO has chances to be accepted… And if the World says “yes” to Microsoft – Yahoo, it won’t object too much to a Microsft – Ebay deal!
BUY, SELL, KEEP 
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