For Those Bored by the Microsoft-Yahoo Merger

Yahoo C.E.O. Jerry Yang started a company from nothing that is now the target of a $44 Billion offer from Microsoft. CNBC's Silicon Valley Bureau Chief Jim Goldman gets to the heart of a news story worth paying attention to.

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ALISON STEWART, host:

If you're listening to the Bryant Park Project, chances are pretty good you've used a computer with Microsoft software on it. And then you used it to check your news or maybe you checked your email on Yahoo!, and maybe you saw the news about Microsoft trying to, originally, buy Yahoo! for 44 billion dollars, but then deciding that was a little bit too much.

So it came back with a lesser offer for Jerry Yang's baby. And then after reading that, you probably clicked through to the story about Christian Siriano guest-starring on "Ugly Betty." I know I would.

(Soundbite of music)

STEWART: Well, not really. I actually kind of got interested in the story, but I wasn't really sure why I should care about the Micro-who deal, why it even matters. So the BPP recurring series, Make Me Care, is for you and for me.

This is where we take news stories that you have this feeling that maybe you should be paying attention to it but you're not. Today, the Microsoft-Yahoo! merger talks. CNBC's Silicon Valley Bureau Chief, and dear old friend of mine, Jim Goldman, is here and ready to play. Hey, Jim.

Mr. JIM GOLDMAN: (Silicon Valley Bureau Chief, CNBC) Alison, how are you? STEWART: I'm doing great. You're as sunny as ever.

(Soundbite of laughter)

STEWART: I love that. All right, before you make us care, Jim, I want you to get us up to date, because there's been a lot of back and forth between Microsoft and Yahoo!. So first Microsoft made the offer to buy Yahoo! and then what happened?

Mr. GOLDMAN: Yeah, you know, it's getting a little nasty as well. Microsoft made the offer about nine weeks ago, about 44 billion dollars, as you said. And the two, you'd like to think, have been negotiating since then, but instead, the hostile bid was met essentially with deaf ears by the folks in Sunnyvale, California, where Yahoo! is based.

And the two really haven't been negotiating at all until recently when there were two separate meeting involving Steve Ballmer himself, Microsoft CEO, coming down to Sunnyvale, and also meeting with the executive team. Yahoo! wants nothing to do with Microsoft. There's an enormous amount of animosity between the two companies, so they're talking about a deal.

Should Microsoft raise the offer? Well, it was a 62 percent premium to begin with. So many people believed that Microsoft shouldn't have to raise its deal because the amount of money they offered to begin with was so much. Yahoo! wants more. They released a letter on Friday, Microsoft did, giving Yahoo! three weeks to say yes or no to the deal.

And Yahoo! essentially said on Monday, in a letter of its own, that Microsoft is mischaracterizing all the negotiations, that it wants more money. It's not against the deal with Microsoft. It just wants the right deal with Microsoft. And that's essentially where we sit.

Basically Yahoo!'s got three weeks to come up with a deal or Microsoft really makes this thing a hostile takeover, goes to a proxy, makes it a really complex process and drags everybody through the mud. It can get really nasty over the next several weeks, so we'll see what happens. Most people think the deal is going to get done, but it's not going to come without a lot of pain first.

STEWART: All right, so that's the backstory.

Mr. GOLDMAN: Right.

STEWART: Now, those are the facts. We're putting 60 seconds on our Make Me Care clock, Jim.

(Soundbite of laughter)

STEWART: When you hear the ticking at the end, you only have ten seconds. The bell means you're out of time.

Mr. GOLDMAN: Oh, man.

STEWART: CNBC's Jim Goldman. The Microsoft/Yahoo! merger/takeover. Bad feelings all around. Make us care. Go!

(Soundbite of clock ticking)

Mr. GOLDMAN: Well, I mean, this is a big deal for consumers, not just investors. Microsoft's move for Yahoo! - remember that Yahoo!'s got about a half billion registered users around the world and this is a very, very bold step by a very, very big company. And a lot of companies are trying to do this, trying to establish a beachhead, if you will, in, really, a new era of digital entertainment and communication.

Think about it. Apple and Sony and Intel and Google, all of these companies are trying to make sure their technology runs on every screen that you have in your home, Alison Stewart. Whether it's the big screen in the den or the smaller screen in your home office, or even your cell phone screen, because remember that these are the portals, the gateways to all kinds of information and digital entertainment, and these guys - this is the portal, the gate, if you will.

Microsoft wants to combine Microsoft and Yahoo! to become a kind of gatekeeper. This is about search. This is about entertainment. Consumers today, they have to think about why platform they have, what kind of technology they have. In the old days, nobody cared about what kind of TV you had or what phone you had...

STEWART: All right, I'm giving you ten extra seconds because you're my friend.

(Soundbite of laughter)

Mr. GOLDMAN: Ah, well. Phone, TV, you didn't care how it worked. That's where these companies want to take it now. You don't care how it works. You just know that it does and you get what you need.

STEWART: All right. So it's going to affect what happens in my home, is what you're telling me.

Mr. GOLDMAN: It's going to affect what happens in your home, in your car, at the office. Wherever you have electronics, these companies want to make sure that their software, their hardware, in many cases as well, are the choices that you make. So, that's what this is about. And it starts with a combined Microsoft and Yahoo! Initially, it's just about taking on Google, because that's the company that owned electronic search today and Microsoft and Yahoo! separately just weren't able to compete.

Down the road, though, as we become much more digitally entertainment-oriented, these companies are the companies that are going to bring you all of that information, and this is what we want to see as consumers. We want to see real, heavy and stiff competition in the marketplace, and right now, there just isn't any because Google owns everything.

STEWART: Jim Goldman, Silicon Valley Bureau Chief for CNBC, on the line from California. Nice to speak with you, Jim.

Mr. GOLDMAN: Hey, great being with you, Alison.

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