Microsoft last week registered a limited liability company (LLC) in Delaware stoking speculation that it is planning an acquisition or joint venture. If true Microsoft may be planning a little bit more than a demo of its search engine and a big ad campaign to promote it.
In a research report, Jeffries analyst Katherine Egbert wrote:
The software giant registered an LLC Corp. in Delaware last week, a move often made a week or two in advance of acquisitions or joint ventures. The registration gave rise to widespread speculation that Microsoft would acquire Citrix. While that's possible, the timing of the registration and recent debt raise indicate to us that it might be more likely Microsoft uses the LLC to form a partnership to boost the amount of traffic flowing through its search engine. It makes sense to us that Microsoft would want to address both the passive and active search markets simultaneously.
For what it's worth an acquisition of Citrix would make much more business sense, but Microsoft's LLC move is likely to lead to a deal with Yahoo.
Regarding Egbert's passive comment:
Passive searches are performed via search toolbars embedded on popular sites, such as Yahoo's homepage or MSN, while active searches come via a user typing the search provider's URL into a browser e.g. google.com.
Egbert adds that a search engine move---perhaps that long-awaited deal with Yahoo---would make sense. After all, Microsoft is going to blow $80 million to $100 million on advertising its "Bing" search engine in an attempt to garner users. It wouldn't hurt to pump some traffic through Bing to get things rolling.