Microsoft announced it is bidding $44.6 Billion for Yahoo this morning. The bid represents a significant premium of 50% over the ~19.00 a share Yahoo was trading at prior to the offer.

My take: Microsoft and Yahoo each have challenges. For Microsoft, they have been in denial that we are transitioning from an operating system-centric world to a network-centric one. Their efforts have been attempts at keeping their cash cow the OS at the center of the user’s experience. Have you tried to use a computer without access to the Internet lately? Most users see a cool new application as being a website they visit, not a box they buy.

Yahoo’s challenge is to figure out how to make money from their name recognition and the 500 million visitors a month they get. They focused on banner ads and branding when Google is making massive profits from text ads. They failed to acquire Facebook and were outbid for YouTube. Their own search driven advertising effort is only now rolling out, 2 years behind schedule. They have smart people but seem to be constantly out maneuvered. Hopefully a Microsoft/Yahoo merger won’t end up like Sears/Kmart.

Here’s an article from almost a year ago about Yahoo’s challenges. Ironically the author thought a Microsoft offer was unlikely.

Here’s an article from Wired about Yahoo’s failures over the years.

This website  can do a realtime check of domain names as you enter them, It’s a very cool way of searching for a new one.