Microsoft-Yahoo tie up: Not if but when, analysts say

Reports that Microsoft and Yahoo are in talks over a possible acquisition or merger have come as anything but a surprise to analysts who question not if, but when, a deal will happen.

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Reports that Microsoft and Yahoo are in talks over a possible acquisition or merger have come as anything but a surprise to analysts who question not if, but when, a deal will happen.

Microsoft and Yahoo, which have held informal merger talks in the past, are at the negotiating table again, driven largely by the rising dominance of Google in the online advertising market, The New York Post and The Wall Street Journal reported on 4 May.

Yahoo didn't immediately reply to phone and e-mail requests for comment. A spokeswoman for Microsoft said the company doesn't comment on rumours.

The possible early-stage negotiations over an acquisition, a merger or some other type of deal come on the heels of Google's move last month to snatch up online advertising powerhouse DoubleClick for US$3.1bn (£1.55bn).

Discussions between the companies are not news to analysts.

"The talks are real," said Greg Sterling of Sterling Market Intelligence. In the wake of the Google-DoubleClick deal, both Microsoft and Yahoo need to do something "radical," he said.

"An alliance wouldn't satisfy the market," Sterling said. "The market wants a 'game-changing' move. On paper, an acquisition looks good."

Google is the enemy, and the sooner Microsoft and Yahoo respond to the Internet giant's growing online presence, the better, according to Rob Enderle of Enderle Group.

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