Microsoft is continuing to flirt with the idea of making a bid to buy Yahoo, an aggressive move that experts think would sling the aging tech company back onto the cutting edge. The New York Times' Michael J. de la Merced reports at the DealBook blog that "Microsoft has signed a nondisclosure agreement with Yahoo, according to a person briefed on the matter, formally lining itself up as another potential bidder for the struggling Internet company." So does one aging tech company plus one struggling Internet company equal too much power? We have no idea, and despite what some of the Aeron-chair pundits (think: armchair pundits with a Silicon Valley spin) it's way too soon to tell.
The negotiations between Microsoft and Yahoo aren't even negotiations yet. As de la Merced explains, the signing of the NDA is just a peek into Yahoo's kimono: "By signing the agreement, Microsoft will join the private equity firms Silver Lake, TPG Capital and others in being allowed to take a closer look at Yahoo’s books." De la Merced goes on to explain that TPG and others have also signed the agreement and the Alibaba Group, which already owns a 40 percent stake in Yahoo, is also preparing a bid. Then comes the speculation:
Microsoft's primary interest in Yahoo appears to be in preserving the company's lucrative partnership with the Web pioneer. Microsoft's Bing search engine fetches answers to user queries, while Yahoo's sales force sells ads against those results.
The company may also push to integrate its newest acquisition, the Internet communications provider Skype, into Yahoo.
There's no mention of Facebook, despite Microsoft having invested $270 million for a 1.7 minority stake in 2007. But should Microsoft actually bid for Yahoo and should Yahoo actually sell a stake, the Microsoft-Yahoo tag team would be tapped into one hell of a colossal ad network, thanks to a recently inked deal between the two companies and AOL. Again, the negotiations so far are happening behind closed doors.