Microsoft Corporation (NASDAQ: MSFT) is the world’s largest manufacturer of commercial software, dominating desktop operating systems. Recent forays into the entertainment industry with the Xbox, Zune, and Windows Live have made it a player to watch in this sector as well. Microsoft's server solutions also remain heavyweight players in their own sector, generating a significant portion (about 25%) of Microsoft's total annual revenue.
Recently, news outlets have been saturated with coverage of Microsoft's unsolicited bid to buy out the internet services company Yahoo! for $44.6 billion. Three months after its initial offer, and after increasing the offer to $33 per share (a $5 billion increase), Yahoo declined the offer and Microsoft withdrew its bid. The acquisition of Yahoo! would have given Microsoft a greater presence in internet search, through Yahoo's portal, and more importantly would have created a new revenue source with sales of online advertising through Yahoo's network. Internet advertising is a rapidly growing industry, but one which has been dominated by the juggernaut Google. After walking away from its second offer, Microsoft talked with a number of different companies about potential deals. Microsoft spoke with News Corporation, AOL, and Facebook.com[1] [2] In mid-May 2008 however, billionaire investor Carl Icahn threatened to try to takeover Yahoo's board of directors in order to coordinate a deal with Microsoft. As a result the two companies have spoken again and are discussing a potential merger yet again.[3]