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Yacrosoft revisited

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Microsoft and Yahoo, seen hanging out at Bungalow 8 several times last year (according to the New York Post), are rumored to be in merger talks once again. Spurred by a love of Latin sounding next-gen technological platforms (Vista for Microsoft, Panama for Yahoo), missed or failed acquisition opportunities (mainly by Yahoo with DoubleClick and Facebook) and a desire to do something to stay competitive with Google, the two companies are getting along much better than they used to. The initial dissolution of talks was caused partly by Microsoft online group managers insisting that the company stick with its own online search and ad systems rather than buy Yahoo. Many leaders of those projects are no longer with Microsoft.
Can this actually work or is this the AOL/Time Warner of this decade? Integration of the two companies could be a huge problem. Yahoo has 12,000 employees and a recently reshuffled corporate structure, with a co-founder (Jerry Yang) that is said to dislike Microsoft and actively avoid the use of Microsoft products.
Yahoo shares surged over 20% in after-hours trading yesterday, as the stock closed at just over $28 a share and now sits at over $34. This pushes the market cap of Yahoo to over $38bn. Microsoft's market cap is closer to $300bn, and the company has about $28bn in cash and short term investments.
Microsoft, Yahoo Reconsider Merger - [WSJ]