Is Microsoft Preparing to Announce a Yahoo Search Deal?

By  |  Tuesday, May 26, 2009 at 7:33 pm

Microsoft may be ready to inject some sizzle into its jaded romance with Yahoo. Jeffries investment bank analyst Katherine Egbert is reporting that Microsoft registered a limited liability company (LLC) in Delaware last week–a move that she believes could precipitate an acquisition or joint venture.

Microsoft also recently disclosed that it is issuing bonds, making an acquisition more of a likelihood.

Egbert suggested that Microsoft’s target may be desktop and virtualization management software maker Citrix, but Yahoo is also a highly candidate. The timing for Yahoo would fits in light of news that Microsoft intends to invest up to $100 million to advertise its “Bing” (or something) search engine.

That investment makes little sense unless Microsoft has a more compelling service and a greater flow of traffic to Bing. A deal with Yahoo would be a means to those ends, and it has repeatedly been on the table for months.

I’m happy using Google for search, so I would need to see some stunning search results before I make the switch. To put it bluntly, Microsoft might be blowing its $100 million on another failed consumer venture, and I believe that a Citrix deal would make more sense in the long term.

The first thing that comes to mind when I think about what’s in it for Microsoft is deploying virtual desktop environments within enterprises. Cloud computing and server-based virtualization are other areas where Microsoft would benefit. Strategically, acquiring Citrix would help Microsoft compete with VMware–one of the software giant’s greatest bete noires at the moment.

Whether Microsoft’s machinations involve Yahoo, Citrix, or something else, keep an ear out for news out of Redmond within the coming days or weeks.

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