Redmond, WA - In a move that shook the technology sector last week, Microsoft launched a $45Bn hostile takeover bid for Yahoo. The combined giant is expected to be a formidable competitor to Google. A Microsoft spokesperson highlighted the strategic opportunity. "Google gives away software for free. We sell software. Microsoft Office Professional costs consumers almost $500, of which roughly $350 is pure profit for us. Google can't possibly match those margins with free products."

Google's response showed an internal focus that raises doubts about their ability to respond to this strategic threat. After a week of phone tag, an apologetic Google senior Vice President responded, "we just landed a two billion dollar online ad deal, released six new free software products, sent Google Universe to beta, and signed an exclusive advertising deal with the entire European Union. We haven't had time to properly formulate a response to this stunning merger." When pressed, she did admit, "It's true, our software is free. We recognize the danger that next year, consumers may be willing to pay over $600 for Office 2009 2010 2011, even though they know that it's almost entirely pure profit for Microsoft. Microsoft's dominant position in packaged software is seen by some as deeply troubling. After all, our software is free. Did I mention that?"

Entrenched as market leader, despite its ugly, bug-ridden, standards-lagging software, Microsoft's theory is simple: "Yahoo has long been ugly, slow to add new features, yet is historically entrenched in the online advertising space," noted Microsoft CEO Steve Ballmer, "This alignment of core capabilities virtually assures us of a successful merger."

Some analysts expressed even more optimism. Mary Meeker, one of the technology sector's most influential analysts who made millions forecasting unlimited growth in the late 1990s, gushed, "Both companies abandoned innovation shortly after founding, growing instead by acquiring or imitating existing technologies. The combined company is a juggernaut, able to pay nine-figure prices for three-person startups. This could start another Internet bubb, er, boom."

Calls to several top Yahoo executives went unreturned. An inside source confirmed that the executives left last week to pursue "entrepreneurial opportunities." Though their three-person startup has not yet chosen a product, they are said to be negotiating being acquired by "an industry leader in packaged software and online advertising whose name we can not yet disclose."