Spotted in Engadget:

"In light of developments since the withdrawal of the Microsoft proposal to acquire Yahoo! Inc., Microsoft announced that it is continuing to explore and pursue its alternatives to improve and expand its online services and advertising business. Microsoft is considering and has raised with Yahoo! an alternative that would involve a transaction with Yahoo! but not an acquisition of all of Yahoo!"

The thinking seems to be that MS wants the search business from Yahoo. That would be a smaller value of stupid than buying all of Yahoo, but still a problem. Why? Well, look at the infrastructure: Microsoft uses Windows based everything, Yahoo tends to be a Linux/Unix shop using a variety of other things. MS' entire track record of acquisition involves rewriting the acquired stuff in MS technology and rehosting on Windows - along with relocating everyone involved to Redmond.

Now, let's assume that MS doesn't actually do any of those things this time around - does it matter? Not really, because all of the acquired Yahoo employees will assume that's what's in store, and the good ones - the ones MS would really like to keep - will start bailing in huge numbers. The remaining staff will end up in a (losing) knife fight with the MS employees who already work in the search area.

The result? A smaller net search business than Yahoo or MS have individually right now. Why will they try to do the merger, given that all of this is obvious? Because most executives have been "out of the trenches" for so long that none of this registers. To them, technology A and technology B are interchangeable, as are the developers who work on them. That's why they end up positively stunned when the supposed synergy fails to arrive.

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