Microsoft's Bing relies on Yahoo for half the information it culls from users everyday. If they lose access to that information their search engine will shrivel up and die. If Apple buys Yahoo they will go into search with $137 billion in cash backing them. If Yahoo does a deal with Google, Bing will not be able to compete. If Apple or Google get Yahoo email, sports, news, entertainment and finance, Microsoft's competing properties will be wiped out. Microsoft must by Yahoo or give up their online services division.
Another permutation might have been revealed through Tuesday's Facebook-Microsoft announcement. If Yahoo did decide to re-up with Bing, perhaps the best approach would be for Microsoft to outsource Bing to Yahoo and for Yahoo and Facebook to work closely on search -- Yahoo on the traditional Web side and Facebook on the Graph Search side. Maybe all three parties see this leading to results that would be superior to the status quo.
MSFT Board will make a decision whether to dispose their online business losing over $2B annually or do something like going back again and offer YHOO a buyout ($33 per share) to enhance Bing search.
Sentiment: Strong Buy
Over half of Yahoo´s profits come from savings made possible by the Microsoft deal.
Microsoft's Bing does not get user information from Yahoo; Bing only gets the query from Yahoo not the user information. Yahoo keeps that information and is not allowed to give it to Microsoft (privacy issues). Microsoft has never had access to that information and their search engine has not shriveled up and died.
The DOJ prevented Yahoo from doing a small ad sales deal with Google in 2008. Google will have great trouble doing any deal with Yahoo as long as there are antitrust laws.
Microsoft cannot give up their online services division. The Microsoft online services division is responsible for all Windows upgrades and customer support. Bing is just a small part of Microsoft online services.
Apple will not buy Yahoo without search and Apple can only buy Yahoo without search.
Yahoo has nothing Apple needs, nothing Microsoft wants and nothing Google can get.