14 DAY TRIAL // The situation around Yahoo is starting to become a little clearer, though not by much. There are definitely groups trying to buy Yahoo. And the company is definitely up for sale, for the right price.
But, even at its lowest, Yahoo is still rather expensive. Few companies would afford to buy it outright and even several private equity funds getting together are still going to have trouble coming up with the money, without betting the farm on Yahoo.
So even those interested are looking for allies, more specifically, big companies with deep pockets which may lend a hand in buying Yahoo, but which don't want to or can't buy it by themselves.
The two likely candidates are the obvious ones, Google and Microsoft. Buying Yahoo would not make sense for either company.
Trying to integrate Yahoo into Google would be hell, there are so many products and such big discrepancies in the corporate culture that you'll end up with a Frankensteinian company.
Microsoft and Yahoo have more in common. They're already working together thanks to the Search Alliance and several of their sites overlap somewhat.
But this means another problem, Microsoft hasn't been making much money from its search engine and related businesses, bringing in Yahoo, which is not doing great either, would not solve anything.
Yet both companies are being approached, by private equity funds and other potential investors, about a buy and both are showing at least some interest.
That's because there is some value in Yahoo, it has hundreds of millions of visitors each month and a massive amount of traffic, which could lead to quite a big revenue source for both companies.
But there's something else at play, especially for Google, it doesn't want Microsoft getting too cosy with Yahoo.
And if Microsoft does get more involved with Yahoo, Google wants it to pay as much as possible and it's going to drive up the price via counter-bids.
At the same time, for Microsoft, the risk of allowing Google to get too close to Yahoo is too great to ignore.
So we have two companies that aren't really interested in Yahoo but are willing to spend a few billion dollars for a piece of the company just to make sure the other doesn't get one.
Of course, any involvement, at any level, from Microsoft but especially from Google is going to get a lot of scrutiny from the government. Google in particular has too much heat on its tail already to be risking even more attention for something it doesn't really want.
In conclusion, all the reasons why Microsoft and Google shouldn't buy Yahoo are precisely what makes their involvement in a possible deal so interesting.