Abuzz over Microsoft's Yahoo bid Video

Abuzz over Microsoft's Yahoo bid Video Transcript

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>> Friday morning's announcement of Microsoft's $45 Billion bid for Yahoo was all anyone in Silicon Valley could talk about.

>> I've read it in the business pages this morning.

>> Yeah, it's big news. It's big news.

>> Makes sense, but it's been on work for the last 6 months, that's what we heard.

>> But for those familiar on the inside, this potential merger came as little surprise.

>> Well, I think there is a sense of inevitability on both sides. You know, I think a lot of people on both sides have felt like it's a natural union just, you know -- the previous times it's been discussed and it was discussed even when I was there a few times. It just wasn't the right timing, but now I think both of them realized that they can't do it alone. And coming together probably makes a lot of sense for both of them.

>> Ali Diab, the President of Ripple TV spent 8 years total working at the management level for both Microsoft and Yahoo. He is in favor of a merge and sees the two companies as complementary of each other culturally and for what they can offer the consumer.

>> I think Yahoo has a really large audience online that Microsoft would love to have. I think Microsoft brings a lot of technology and management expertise and technology capability and frankly money to Yahoo to allow to compete better with Google.

>> I think in the end, Microsoft's back was against the wall because they saw this Google threat coming. And so, how are they going to compete? Their search efforts were going nowhere. They were losing share in search. They didn't have that [inaudible] in small and medium size businesses, so they needed to get -- acquire Yahoo and I think this is in many ways a last resort. They've tried everything. And I wouldn't say it's desperate, but to go into an acquisition of this size, which Microsoft has never done is a significant step for them.

>> Charlene Li, an analyst for Forrester Research is not as convinced that this merge is a natural fit or that mutually beneficial. One concern is the overlapping services that the companies offer.

>> Just to give an example, you have MSN Autos and Yahoo Autos. Two really profitable places for them because lots of people come to there, lots of advertisers. If they merge those things together, what happens is that one-plus-one-equals-two, is it a 3 or is it actually going backwards, because these advertisers feel like, "Oh I don't have to advertise in both places now. I can reduce my spending because it's in one place now." And they're gonna have to do that for every single property with this overlap and this is overlapping everything.

>> Looks like a good opportunity for them because they definitely need to sort out their search site.

>> Now that the Microsoft's solidness are brought into [inaudible] and Yahoo's nimbleness, I think it look pretty well. I'm very happy for them.

>> It's kind of a Sunnyville group. It's kind of a hometown thing, Yahoo.

>> Now let's keep some perspective. This proposal is in its infant stages. In a week, a congressional anti-task force will review the merger and then from there it's almost guaranteed to be a long, slow, drawn-out process until any sort of outcome is reached. Kara Tsuboi, CNET News.com. ^M00:03:03 [ Music ]