Two Battered Behemoths, One Bold Bid

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Meanwhile Buzzmachine.com's Jeff Jarvis calls Microsoft and Yahoo the "dinos" of tech, compared to Google and its powerful open-sourcing model. "Will this be big enough to beat Google? No, because big won't win in the end," Jarvis said. "Open will."

The Optimists

But optimists can be heard above the din. They largely contend that bigger will have to be better. A posting from TechCrunch's Duncan Riley (which begins simply with, "WOW") says Microsoft plus Yahoo equals a stronger competitor against the Google empire.

Joe Apprendi, CEO of ad network Collective Media, agrees: "Microsoft and Yahoo combined in terms of display advertising could represent about as much as Google in search." Danny Sullivan at Search Engine Land, not so surprisingly, echoes the "more search the better" mantra: "Search is important, and Microsoft has failed to build, much less maintain, search share while Yahoo has held steady against Google."

Standard & Poor's software analyst Jim Yin also weighs in on the positive side: "We view this acquisition positively because it would help Microsoft compete more effectively against Google in search engine and online advertising. Although the merger presents integration challenges, Microsoft identifies $1B of synergies in areas of online advertising yield, capital expenditures, and research and development." (S&P, like BusinessWeek, is a unit of The McGraw-Hill Companies (MHP).)

Forrester Research (FORR) analyst and Vice-President Charlene Li says size matters for another reason: social networking potential. "Social computing loves scale," she writes. "With a combined audience, and the potential of leveraging their base of e-mail and instant-messaging users, [Microsoft and Yahoo] could overnight create one of the largest socially connected audiences online and become the foundation for an 'open' social graph." She says after nabbing Yahoo, Microsoft could next eye Facebook.

The Motley Fool sees the potential takeover not so much as the road to a sparkling future, but as the only path to survival. "Microsoft is offering to put Yahoo out of its misery," reads the site. "Yahoo has no near-term savior other than Microsoft. The catalysts aren't coming, and neither are rival suitors…. Cry all you want, Yahoo, but it's Mr. Softy or bust."

That is, unless another bidder joins the fray, writes blogger and former tech stock analyst Henry Blodget in his post, "Hold Everything! We may Get Another YHOO Bidder!"

Rumor has it that an unnamed major private equity firm, along with New York-based Quadrangle Partners, could also be in the running for Yahoo, according to Blodget. He says that since Yahoo was blindsided by Microsoft's offer, the company could be looking for an escape route: "A deal with either of these firms would look very appealing."

Meyerson is Deputy Technology Editor for BusinessWeek.com. Herbst is a reporter for BusinessWeek.com in New York.