5 Reasons Why Microsoft Will Not Buy Yahoo Now

So, Jerry Yang, Yahoo's beloved CEO, now wants Microsoft to buy the battered and bruised Internet Property; that's not a rumour, that's a fact that he calmly laid out to a bemused audience at the Web 2.0 conference, hosted by Federated Media's Head Honcho, John Battelle.

In his own words, he said that "To this day, I have to say that the best thing for Microsoft to do is to buy Yahoo. I don’t think that is a bad idea at all."

Just like a property investor who held on to his 3-bedroom house during the Halcyon days, Yang defiantly told Microsoft to stick their proposal somewhere else.

And just like buy-to-let novices, he now seems to regret his act.... But how will Microsoft respond to Yahoo's charm offensive? Well, we've got five good reasons why Microsoft will not buy Yahoo, at least not in the forthcoming 100 days.

(1) Why buy now when Yahoo can go down even more.

Yahoo is currently trading at nearly $14.50, that's 56 percent less than Microsoft's $33 per share back in February. In other words, Microsoft might have been wise not to buy then and keep its war chest closed for now. One do not know how low Yahoo can go. And Microsoft knows that the current economic conditions can only make things worse for rudderless Yahoo.

(2) Microsoft has other more pressing issues

Microsoft has never acquired an iconic company of this size. Getting Microsoft to swallow Yahoo could be as problematic as getting a python to swallow an alligator. It is a long, tedious process that is potentially lethal. And there's always the chance that a third predator could swoop in, that predator being Google.

(3) Choosing Yahoo's best bits could be cheaper and quicker

From top developers to top online properties on the cheap, a broken up Yahoo could possibly be a cheaper alternative to buying the whole lot altogether. Yahoo is still the biggest online property, has the most email users, one of the most popular Instant Messaging services and one of the most successful Photo websites on the web. In addition, it would make the whole process of incorporating Yahoo bits faster, less painful and less costly.

(4) Why buy one when you can get two?

Microsoft could also leave Yahoo to merge with AOL before pouncing on both and buy them at a bargain price, certainly less than the $47.5 billion Yahoo asked initially. Microsoft has the financial might to do so with cash reserves of around $23 billion (oh, and Apple is sitting on more than $24 billion in cash and short term investments by the way).

(5) There are other cheaper bargains out there

Microsoft needs not focus on Yahoo only; there are plenty of other great bargains around waiting to be snapped up at the right price, at the right time. RIM, the maker of Blackberry, could potentially be a very tasty acquisition, so could Symantec (at $11 billion) or even Adobe (a bargain at $14 billion).