I saw a news iterm in the papers that Microsoft may raise its bid for Yahoo. Let's face it folks, both these guys need each other. Microsoft has tried its hand in the online game through MSN, acquiring Hotmail, Slate etc and these efforts haven't added up to much. The Yahoo bid is probably its last chance (since Google is not for sale or is too expensive) to establish a significant online presence. The alternative is to go on another spending spree and revamp MSN and other online properties.
For Yahoo, there are not too many potential acquisition candidates and time is running out. At one point in time, Yahoo was *the* first Internet destination for most people, Google now holds this prime spot. Unless Yahoo comes up with some killer app that increases its market capitalization, it could see a decline in value. And value on the Internet can sometimes decline dramatically. Remember Pointcast, which was valued in billions at one point in time and was eventually sold to news Corp for a mere $7 million?
There will be a bit of haggling, Microsoft will up its price for Yahoo and both these chaps will fall into each others arms and issue feel-good press releases.