It would be a good thing if Yahoo stays independent, and it would be a good thing if MS succeeds in buying them because surely Ballmer will make a botch of it.

... What does Microsoft hope to gain? I don't see an upside. A Microsoft takeover does not increase the competition against Google. It merely brings a third major Internet presence under same roof as MSN and Hotmail.

The downside is substantial. Yahoo is a technology company whose only real asset is the knowledge in the heads of its employees. If they leave in the wake of a hostile takeover, then the new owner will have won a pyrrhic victory.

"Microsoft appears to be siding with a hostile takeover approach".

What else is new. That's what MS is, hostile! That's why nobody likes them anymore. Nobody wants this deal except them. The public sure isn't in favor of it.

Ballmer's rationale for the deal is that Yahoo's technology would compliment Microsoft's installed user base, and could cause for exponential success for both companies.

No, I don't think so. They'll have to close down Yahoo like there music stores.

is this what the combination would be called? "MShoo"?

I could see Yahoo keeping its most important brains if they were offered sufficient inducements/compensation. I'm assuming MS is smart enough to do at least that, so that part doesn't concern me. Otherwise I agree with macscientist, I don't see how bringing Yahoo inside the MS corporate structure is going to suddenly make Yahoo more of a competitor to Google.

Where's the synergy? MS thinks Yahoo acquisition will accelerate their search engine growth. How, exactly? I understand why Company A would buy Company B in order to obtain a presence in markets where it would otherwise take much longer to expand (plus if you're talking about brick-and-mortar stores, you get those prime locations which are already taken up by Company B).

But other than getting Yahoo's customers (let's see how long they stick around), how does this help MS compete with Google? Yahoo ain't getting it done and I don't have the least bit of confidence in MS' ability to figure out how to beat or compete with Google. You don't have to be a Mac scientist ;-) just look at Vista and Zune/Zune Marketplace/MSN Music and draw your conclusions.

This is, after all, the company which back in the mid-90s declared the internet was a fad.

I couldn't help but look up some past quotes by and about Gates and Microsoft:

"The Internet? We are not interested in it" -- Bill Gates, 1993

"Sometimes we do get taken by surprise. For example, when the Internet came along, we had it as a fifth or sixth priority." -- Bill Gates, Jul, 1998

"We had planned to integrate a Web browser with our operating system as far back as 1993" Microsoft (27 Jul 1998, filing its first court responses to federal antitrust)

In response to Java: "Anybody who thinks a little 9,000-line program that's distributed free and can be cloned by anyone is going to affect anything we do at Microsoft has his head screwed on wrong." -- Bill Gates

"Microsoft Products are Generally Bug Free" -- Bill Gates

"There are people who don't like capitalism, and there are people who don't like PCs, but there's no one who likes the PC who doesn't like Microsoft." -- Bill Gates

"Microsoft does not innovate. It buys, imitates, or steals. It makes things difficult for software developers, and thus eventually for users." -- Richard Brandshaft, San Jose Mercury-New

"There is a fantasy in Redmond that Microsoft products are innovative, but this is based entirely on a peculiar confusion of the words "innovative" and "successful." Microsoft products are successful -- they make a lot of money -- but that doesn't make them innovative, or even particularly good." -- Robert X. Cringley

"We have no intention of shipping another bloated OS and shoving it down the throats of our users." -- Paul Maritz, Microsoft group vice president

I wish I had a date on that Maritz quote, so I could figure out how many times since then MS has done exactly that.

why does this feel like a bully on the playground who keeps punching the little kid in the stomach and yelling, "c'mon be my friend"?!?

You, not MS (OK, MS too, but I think that's insulting all of you by putting you in the same category). This is shaping up exactly as you would hope. A hostile takeover is great. It requires MS to spend a boatload more money on the company (if the price is $30 now, to force a takeover, the price will have to rise), which means more money spent by MS (and more borrowed by MS), which only puts them into the 'beleaguered' category sooner.

I do believe that was the point of the very first comment in this thread.