Microsoft + Yahoo = much less than sum of parts.
Umair explains pretty well.
I am a little more positive about Yahoo than Umair ... in the sense I see them doing some interesting and sometimes smart things. Search Yahoo here. Whether these little experiments are enough to upset the Yahoo DNA, I don´t know. I would suspect Umair is basically right. Getting merged with MS will side-track Yahoo from noticing when the smart things they do are working. And Microsoft will continue to fail to get anything about the web until they stop thinking of themselves as a software product company.
The funny thing is, that some people do imagine this is a good idea. Not sure what those people imagine, something like markets are fungible maybe? What they seem to ignore is that software companies, web-tech companies are idea companies. And ideas are not fungible!
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