$44.6 billion dollars!?!?!

I was going to write on another topic related to my recent post on the subject of antitrust and Microsoft. That, however, seems less relevant (for now) given the news that Microsoft is bidding to purchase Yahoo, with the current offer on the order of $44.6 billion.

Suffice to say, Microsoft employees (a group among which I count myself) are abuzz with the news. I always knew that Microsoft was trying to catch Google in the search business, and rumors abounded of Microsoft considering a purchase of Yahoo, a company that dates back to the Internet's earliest days and was one of the first sites I ever visited when I got on the Internet back in 1994 or 1995 (yes, I'm sure that is late by the standards of some ZDNet regulars).

Truth be told, though search is important, it's probably the advertisement possibilities and the ability to monetize free product that most attracts Microsoft's interest. Google could be selling little troll dolls, and Microsoft would be chasing them if Google had found a way to generate ad revenue from the little green monsters. Microsoft is making headway in building its own advertisement network, but the addition of Yahoo's network would surely energize things. Economics of scale do matter in advertising.

Even so, I was blown back in my seat by the scale of the proposed deal. As a sum, it's about the size of the GDPs of Nicaragua and Panama combined (though in 2000, when the dollar was high, it would have matched the combined GDPs of most of Central America). That image you see at the top of the page (which I grabbed from crunchweb) depicts how big $86 billion in $1 dollar bills would be if stacked up in one place (those small gray dots in the lower right corner are supposed to be a human being and a car, posed for scale), so divide that in half to get a mental picture of how much money that is.

Given the scale of the thing, I would propose that Microsoft take a page from Roman history. The ability to even afford a purchase of that size is a testament to the strength and power of the Microsoft corporation. Romans understood power, and they had a habit of marching it in showy displays through the streets of Rome or other large cities to show people just how strong the Roman empire was.

Along those lines, I propose Microsoft do something extravagant, like build the tower of money depicted above, or offer to fill every Yahoo building to the rafters with cash (proposed by Darren Ryden, a UK-based Microsoft employee with whom I discussed the proposed deal). Of course, Yahoo might not appreciate the latter option, not because of the loss of office space, but because it would likely result in less than $46 billion given that Yahoo probably doesn't have sufficient volume of office space to generate the full sum.

Do I agree with the deal? To be honest, it feels like a gamble to me, but I'm not the one making these kinds of decisions, and besides, I haven't spent more than an hour considering the synergies to be achieved by a merger with Yahoo. I do know that we work pretty closely with Yahoo already, so its better than buying a company with whom we have fewer contacts.