Micro-hoo! Can Microsoft really buy the world?

Apparently, Microsoft is frustrated with being #3 behind Google, offering today to buy Yahoo! for $44.6 Billion in cash and stocks. this bid came right after Yahoo! reported a weak fourth-quarter, saw its stock price close at its lowest in four years and announced a plan to cut 1,000 jobs.

If Yahoo! CEO Jerry Yang finally caves in and accepts a buyout offer, it would still make Micro-hoo! number two behind Google. But Jerry Yang has always thought that he would be the one to lead Yahoo! out of its current slide.

According to All Things Digital, Microsoft purportedly placed their offer quietly, and tried to bully Yahoo! into a response or Microsoft would go public with the information. I guess Yahoo! couldn’t find a result fast enough.

Microsoft CEO Steve Ballmer’s letter to Yahoo!’s board of directors has been acquired by Silicon Alley Insider. In their own words,Microsoft claims to “have great respect for Yahoo!” and thinks this deal will make them “better positioned to compete in the online services market.” The Press Conference Call and details from Microsoft is available to read online and includes a Webcast and related PowerPoint presentation.

Clearly, Microsoft is trying to flex their muscles and show that they’re still a contender in the Search game. But really, throughout 2007, Google maintained a 64% share in all U. S. searches. Microsoft’s Live search never saw better than 12.9% in 2007, depending on which numbers you look at. comScore tallied Google as only 56% share of searches. Together, Yahoo! and MSN/Live searches still couldn’t equal the share percentage Google held all year.

But search isn’t the reason for this huge gamble of an offer. This is about really ad revenue. Yahoo’s properties are currently the #1 trafficked Web sites, Microsoft’s are #5. Google, public enemy number one, hits the most trafficked properties lists at #2.

But does more online traffic really equate to more online advertising revenue? Clearly Microsoft thinks so. Their offer letter to Yahoo discusses the use of economies of scale in online advertising platforms. Oh wait – do I have this right? Someone built a better mousetrap and Microsoft wants to buy it and brand it as its own. Haven’t we’ve seen this before?

Groundhog day is tomorrow. It’s that festive day that inspired a movie about a ever-recurring situation. Perhaps Microsoft released their offer a day early? No, that can’t be. Microsoft never beats their deadlines … unless, of course, what they release is seriously flawed and broken. Hmm…..