Four reasons Microsoft shouldn't buy part of Yahoo

By Preston Gralla

Reports say that Microsoft is part of a consortium bidding to buy a minority stake in Yahoo. Making the deal would only hurt Microsoft. Here are four reasons it should stay away.

Microsoft already has what it wants from Yahoo

Yahoo has only one real thing of value for Microsoft -- a share of the search market. But Microsoft already has that from Yahoo, thanks to a deal in which Bing powers Yahoo's search engine. Because of that Bing has a serious share of the search market, up to around 30%. Buying a piece of Yahoo won't increase that market share. As the old saying goes, if you've already got the milk, why buy the cow?

Yahoo is on the skids

Yahoo has been in decline for years, and at this point is a demoralized company with a demoralized staff. Microsoft has enough problems with retaining top staff and keeping its employees motivated. Adding Yahoo to the mix will only hurt, not help.

Microsoft could use the warchest to buy smart startups

There are plenty of young startups out there with a great deal more potential than Yahoo has. Microsoft would be far better off buying hungrier, smarter startups than buying Yahoo. And if Microsoft is eying Yahoo because it wants the company's engineers, it would be better off buying a slew of smaller startups as well.

Integration would be a nightmare

Even though Microsoft would only be part of a consortium buying a part of Yahoo, the intent would clearly be to in some way merge parts of the companies or companies' business plans. Such mergers often fail, and even when they succeed, it often takes years to work through the kinks. Microsoft right now is at a crossroads, and needs to focus as much of its attention as possible on mobile and Windows 8. Buying part of Yahoo would prove to be a distraction.

One reason to buy into Yahoo

All that being said, there is one good reason for Microsoft to buy part of Yahoo -- to make sure that Google doesn't buy it. It's important that Microsoft continue to power Yahoo search, and if Google bought part of Yahoo, that deal could be in danger. It's not clear, though, that Google is really interested in Yahoo. And even if Google were interested in Yahoo, buying the company and then squashing the Bing deal could put it in the cross-hairs of anti-trust investigators.