Yahoo/Microsoft: Synergies, Google, Goldman’s Timing, etc.

Some other quick thoughts on the proposed $44.6-billion deal Microsoft deal:

  • Microsoft claims a billion-dollars in synergies from scale, operational inefficiencies, etc. Let’s be charitable and say half of that will come from layoffs. That works out to roughly 3,000 people, or even a little more, depending on how you count costs.
  • Early this morning Goldman made an awfully timely call, putting out an analyst note at 3:56am PST suggesting that Microsoft should buy Yahoo — only to freeze analyst coverage of Microsoft at 6:55 AM PST on the news that Microsoft has offered to buy Yahoo and it is providing i-banking support. Yay! Boo! Yay! Or something.
  • While the deal has to happen, I’m still not convinced that giving the combined companies a larger search presence is linear (or even geometric) improvement in MicroYoo’s attractiveness to advertisers, as some argue. My sense is that most people use Google because they like it and it works, not because they can’t find Microsoft or Yahoo’s comparable service.
  • This is good news for Google, of course. It gives the company carte blanche for other large acquisitions, if needed, and, more importantly, it means that two elephants will be busily mating out back so that it can march merrily in the confusion to further share gains in both search and advertising.

More as the day goes on.