The best defense is a good offense. If Yahoo Inc. (NASDAQ: YHOO) does not like Microsoft (NASDAQ: MSFT)'s buyout offering price of $31 per share and Microsoft insists this is a fair price, then Yahoo should turn the tables on the software giant and buy its internet search and advertising assets at a similar valuation. Since it is smaller, it should cost less. If this is too big for Yahoo to swallow, then they could do it with a partner -- would Mr. Murdoch have an interest in this? Or maybe Mr. Diller or Mr. Malone would?

Another possibility would be to forget about an acquisition strategy and think merger!

The idea I like best is for Microsoft to spin out its internet assets and merge them with Yahoo's. I think this approach would add value to Microsoft, the cash machine, and create a new, larger, independent internet competitor for Google Inc. (NASDAQ: GOOG). If it were independent from Microsoft, it may also facilitate on the deal's acceptance as far as antitrust issues are concerned. If Murdoch's News Corp (NYSE: NWS) took an interest, then MySpace could be added to the mix. It would be a very strong company.

Sheldon Liber is the CEO of a small private investment company and the design and research principal for an architecture & planning firm. Disclosure: I do not own shares of GOOG, MSFT, NWS or YHOO.

Yahoo should buy out Microsoft's search & advertising assets originally appeared on BloggingStocks on Mon, 11 Feb 2008 13:56:00 EST. Please see our terms for use of feeds.