Former Merrill Lynch analyst Henry Blodget said that buying Yahoo would give Microsoft 30% market share in online search space instantly. It would also boost Microsoft's ad share close to its 40% goal.
On Thursday, Kevin Johnson, Microsoft's executive in charge of its advertising business, said that the software giant was aiming to be one of the top two players in Internet advertising within three to five years.
Johnson said that Microsoft aims to be one of the top two players in Internet advertising within three to five years. It aims to get there by increasing its share in Web search, page views, advertising dollars and time spent online.
Blodget argued that Microsoft is still trailing both Google and Yahoo in web search space as also in online advertising. So, the only way the company can achieve its targets is by going for an acquisition, he said.
According to web site analytics firm, Compete, Microsoft' online search market share was 9.2% in September compared to Yahoo's 19% and Google's 67%.
Blodget wrote on the popular blog 'The Huffington Post', that if the deal does materialise, Microsoft would benefit much more than Yahoo. "It will be disastrous for Yahoo!, which is having enough trouble competing with Google on its own."
Yahoo shares closed US$1.40 higher to US$26.82 after trading as high as US$27.13 earlier in the session. Microsoft, the world's largest software company, added 33 cents to US$34.09.
Source: Yahoo! FanClub
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