Arrington et. al. are missing the point. This is a war of attrition. Yahoo fully accepts its fall from grace, but also knows that Microsoft’s inflated stock is next inline. Yahoo is betting that two years from now, Microsoft will be trying to sell copies of Vista for less than Halo IV – and still not succeeding.

Meanwhile, all these temporal shakeups don’t change the internet’s basic use: More people, a LOT more people, visit Yahoo everyday and spend more time on its web properties, than visit Microsoft.

In fact, a year from now, the average user will spend more time on Yahoo’s site in a week, than they will on Microsoft’s (MSN, whatever) in a year.

That’s why Microsoft is swallowing the big L pill this week. Losers.

1. Microsoft would have invested $8 billion in Yahoo! at $35/share;

– OK

2. Microsoft would have purchased Yahoo!’s search assets for $1 billion, and assumed the operations and R&D expense while returning data back to Yahoo! for use in their advertising business;

– But that’s a one time payment, not $800M a year for 10 years, a number that is surely a low-ball estimate so as not to overpromise. (Knowing Google’s ability to monetize, it will be more.) This is apples and oranges.

3. Microsoft and Yahoo! would have entered into a long-term search partnership, where Microsoft would have provided favorable economics to Yahoo! search, including a three-year guarantee of higher monetization than Yahoo!’s Panama paid search system currently provides.

– If Yahoo can’t compete with Google for search monetization, how can Microsoft? This is just Microsoft writing another check it can’t afford to cash. And the sum total of which will be far below what Google will make for Yahoo.

I don’t see how anyone can criticize Yahoo for taking Google’s money to reinvest in their own efforts to grow their footprint, either in search or in display. What would be the alternative? Turn down the money just to preserve the illusion of competition, to make the DOJ and some bozo analysts or bloggers happy? Keep this separate from the discussion of whether or not they should have taken the buyout offer from Microsoft. They probably should have. But now that we’re beyond that, the question is whether this is the right deal for Yahoo and for the industry. The answer is — painful as it is to admit — yes on both counts.

Oh please. In the old days – when these people were making Microsoft what it is today – Microsoft would have made an offer that Yahoo couldn’t refuse. Microsoft doesn’t have that leverage anymore, plain and simple.

I think it’s best if consumers boycott HP because HP is an unethical company and that their products are poorly design. I had my experience with their inkjet printer, it died after 3 months of use, piece of crap. HP used to make good products, somehow that’s been going downhill ever since Mark Hurd takes the helm. I guessed it took sometime for people to realize the number of layoffs they made impact quality.

These people made Microsoft what it is today. It’s extremely simple. They made an offer – and it didn’t work out. They refused to raise the price by as much as Yahoo wanted, and Microsoft refused to pay.

This happens everyday in the corporate world. Grow up people. While it would’ve been great for them to acquire Yahoo, they can easily build their own brand in the same amount of money, plus forget all the hassles of working with a failing company. Yahoo is slipping. That’s the truth.

Do you know what you are talking about? This is a game of negotiation. Microsoft has more to lose in the coming future if they don’t chase the technology. Just like software with any companies out there. Look at software companies that have been killed before, Novell, Corel, Borland, etc. If you don’t quick embrace the new frontier, you going to lose more than you THINK!

I suspect within 6 months time, without acquiring Yahoo search marketshare, Microsoft market cap will dwindle from $270B to $220B. I’m being generous here because at the pace technology is moving, M$ Office won’t command as much as it would today, at $399.99.

I am impressed, I didn’t know 8 year olds could string that many big words and foul comments together in a couple of paragraphs!

Do you know any of these individuals personally to be able to express this much insight?

The only person who is ‘evil’ here is Jerry Yang which I have a suspicion might actually be on here posing as Sheryl Twain!

Morale boosting e-mails typically don’t come with subject lines as bland as, “Update on our Yahoo! discussions.”

Microsoft is dumb to pass off acquiring Yahoo because that’s their only chance to increase search ad revenues. Otherwise, they will continue to be second rated and can’t charge as high as google per search term. Eventually, the cost per search will dwindle as more and more people use Google for search as oppose to Microsoft, and eventually Microsoft will be out of the search game altogether and can’t command any price for search term.

I don’t think Microsoft will give up on Yahoo. They will find a ways to acquire Yahoo search one way or another, or else their market cap is going to TANK!