Yahoo!/Microsoft Deal Deserves Lots of Scrutiny

The Justice Department's not going to take the deal between Yahoo! (YHOO - commentary - Trade Now) and Microsoft (MSFT - commentary - Trade Now) lying down. I know, from the Google Books deal, that they are worried about Google (GOOG - commentary - Trade Now) being too powerful, so it is entirely possible that they might say, "Google needs a stronger opponent in search, and now it has one." But a far more likely interpretation is, "We had three players in search and now there are two, and that's anticompetitive."

More on Yahoo!/Microsoft

Deal Will Test New Antitrust Chief

If the antitrust division is interested in examining the tie-in deal between Apple (AAPL - commentary - Trade Now) and AT&T (T - commentary - Trade Now) (which truly is nutty given that AT&T subsidizes the phone price in order to get you and isn't gouging), won't it be worried that Google and Microsoft could become a happy duopoly? Does anyone really believe that this won't be a focus?

As far as Yahoo!'s stock today, it shows that no matter what, there was always hope that Steve Ballmer would sit down with the "reasonable" Carol Bartz and make a deal at $22-$25.

Instead, Ballmer, who taken more than his fair share of lumps lately, simply got exactly what he needed: a chance to really put a dent in Google's margins and take share now that Bing will subsume Yahoo! basically for nothing. It is quite a good deal.

As someone who has used Bing as a default site every time I type in the wrong letters for a Web address and it pops up, I can tell you that it is pretty indistinguishable from Google.

When you add in the pushback from Apple on Google applications, you almost want Justice to rule against Microsoft, because while this is a P/E force multiplier for Microsoft and an end to the speculative reasons to buy Yahoo!, it's the best reason to sell Google that I have seen since it came public. Thank heavens it sells at a cheap multiple to its growth.

That's its only cushion.

All of this convolutes a potential Nasdaq rally, which we have gotten used to on these days. But it is good to see Microsoft have some uptick, and we can marvel at Apple's power. I sure wish Kulicke & Soffa (KLIC - commentary - Trade Now), the once-all-powerful semi equipment company, meant more to the market these days!

At the time of publication, Cramer had no positions in the stocks mentioned.

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