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Disappointing results, job cuts, the loss of its former CEO and a takeover approach from arch-rival Microsoft.

We take a look at a tumultous past couple of weeks for Yahoo.

Last year saw a spate of acquisitions by the major internet players, all looking to grab market share in the online marketing industry.

Agency mergers and acquisitions have been big businesss, kicking off with Global Media’s merger with Bigmouthmedia, Cossette's aquisition of Dare and more recently the iCrossing /Spannerworks deal.

Microsoft has been keen to make up ground in the ad-serving and tracking technology industry through the acquisition of aQuantive, Atlas, AdECN and ScreenTonic.

And its determination to have the lion's share of digital advertising looks set to continue with its latest announcement.

After months of rumours of talks, Microsoft made a formal approach to acquire Yahoo! for $45bn at the start of February, valuing the company at $31 per share.

Commenting on the proposed acquisition, Microsoft's chief executive Steve Ballmer said:

"We have great respect for Yahoo, and together we can offer an increasingly exciting set of solutions for consumers, publishers and advertisers while becoming better positioned to compete in the online services market."

The approach was made following disappointing 2007 fourth quarter results for Yahoo, which has seen revenues suffer under increased competition. Profits fell by some 23%.

The poor results led to Yahoo announcing that it was to cut 1,000 jobs from its workforce, arguably its biggest cull since the dotcom crash.

Although it was said to have been planned for several months, Terry Semel, Yahoo!'s non-executive chairman, also stepped down from the board of directors after seven years with the business.

Jerry Yang, Yahoo's chief executive officer commented that:

"Terry Semel has been a great partner and true friend, and has played a key role in helping to grow Yahoo!'s business - and industry-leading audience.”

Roy Bostock has been chosen to replace Semel as Yahoo! non-executive chairman.

So where does Yahoo go from here?

With $44bn on the table, shareholders have to make one of their biggest decisions for the company and that will also shape the future of search.

A joint effort by Microsoft and Yahoo!, both larger players feeling increasingly threatened, could give them the best chance of winning back market share, especially in search.

However it could be a challenge for these seemingly very different companies to integrate well together.

Matthew Finch - view blog

Matthew Finch

Published 11 February, 2008 by Matthew Finch

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