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A Yahoo Takeover Trade as Google Partnership Crumbles

MSFT should offer $13 for Yahoo. Why?
1. overall market levels have come down, and any recovery will not be "V" shaped but perhaps "L" shaped

2. pricing in the Search world will probably come down as companies realize they are not getting enough end value (aka click-through all the way to actual sale)

3. Yahoo was counting on revenues from deal with GOOG to help build out additional features/R&D. But now, financial pressures will cause YHOO to slow down such product enhancements (or cause YHOO to take on any deal to accelerate product enhancements)

4. MSFT has the negotiating power/control now, as GOOG is out of the way.

5. Perhaps Jerry Yang's arrogance has abeyed in this economic climate.

6. MSFT may (and should, imo) wait things out to observe the effects of things returning to 'normal' at Yahoo without the GOOG revenue and ultimate effect on Yahoo's market share and revenues (note market share could go up, but ad revenue received per market share unit could decline!). The idea here is to better understand the likely future trends as the economy and operating environments have changed substantially.