A discussion about the software industry and their coders

NewYork Post story has fuelled interest in a Microsoft-Yahoo! deal once again. The deal reportedly is worth $50 billion. Yet another round of speculation it seems. Microsoft wants to find some way of beating Google's threatening advance via Advertising Based Business Models. Yahoo! with its long history and experience on the Internet may be the only way Microsoft will climb the learning curve fast.

WSJ and Forbes are also covering this story.

However, shortcuts via mergers don't solve long term problems. The issue is not if the story is true or not. The issue is that Google has genuinely built a lead in ad based monetizing systems that Microsoft has almost no clue about and Yahoo!, for long, has struggled to match.

Shares of Yahoo! are up since the news story broke. According to the NY Post story Goldman Sachs has been roped in by MSFT to work this deal out.

While Microsoft and Yahoo! have held informal deal talks over the years, sources say the latest approach signals an urgency on Microsoft's part that has up until now been lacking.

The new approach follows an offer Microsoft made to acquire Yahoo! a few months ago, sources said. But Yahoo! spurned the advances of the Redmond, Wash.-based software giant. Wall Street sources put a roughly $50 billion price tag on Yahoo!.

"They're getting tired of being left at the altar," said one banking source who has recently had talks with Microsoft. "They now seem more willing to extend themselves via a transaction to get into the game."

Part of the reason for that is because Google keeps trumping Microsoft on the deal front, beating out the company on not just DoubleClick, but also for a renewed search advertising pact with AOL in 2005 that Microsoft lusted after.

Moreover, with Google developing Internet-based software that directly competes with Microsoft Office, sources said Microsoft has no choice but to go on the offensive.

"The minute you hear Microsoft start arguing against something on antitrust grounds, you know they are desperate and need to do something big," said one source.