The deadline for Yahoo to reply regarding the Microsoft take over ended Saturday night, so what happens next? Will Microsoft attempt a hostile take over, will Yahoo accept the bid, or will Microsoft walk away?

I think that Microsoft will give a half hearted attempt at a hostile take over but eventually walk away. This merger wouldn’t be good for either Yahoo! or Microsoft. Microsoft would now have to deal with all of these properties that Microsoft already has clones of, Flickr, Yahoo video, Yahoo Mail, etc. and it wouldn’t be good for Yahoo! because I think that Yahoo! is WAY undervalued and could actually has a pretty good chance at taking on Google, I DON’T think that Microsoft+Yahoo has any chance at taking on Google because of the issues of dealing with the merger.

Let’s take the AMD/ATI merger for example, neither AMD or ATI was beating their main competitor when they began the merger, but after the merger happened Intel and Nvidia pulled so far ahead at price/performance that AMD/ATI is having a really hard time competing.

The same thing that is happening with AMD/ATI WILL happen to Microsoft/Yahoo and let’s face it, I don’t think either Microsoft or Yahoo are that well managed on their own.

I haven’t talked about this story on the blog at all, mostly because I figured it would blow over a lot quicker than it has, I’ve always thought that it was a bad idea and pretty much thought that it was a non-story because I (like John C. Dvorak) believe that even if Microsoft tries to takeover Yahoo the EU will stop it dead in its tracks.