Big Shocking news: Microsoft Bids $44.6B for Yahoo!

And one of my personal favorite dreams for both companies to join forces and become one, … well, we’re close to that.

Although this is not a financial blog nor a stock market watch blog, but I think the effect this will do to the online advertising industry will be huge.

As we speak, the online advertising industry is a $40B and it’s expected to be $80B in less than 3 years, that’s a breaking neck rate as they call it.

I think that Steve Ballmer is in a desperate grab for the online advertising market, so, Microsoft came through and bid $44.6 billion, or $31 per share, for Yahoo.

The bid represents a 62 percent premium to yesterday’s closing price for Yahoo shares, although, as one analyst pointed out, it’s only a roughly 15 percent premium over the 52-week average trading price.

While this is Microsoft’s boldest strategic move in a while, the company has made several aggressive attempts to gain footing in the online ad market over the last 12 months. In May 2007, Microsoft announced its $6 billion acquisition of aQuantive (now called: Microsoft ad Marketplace) and in October 2007, they spent a huge¬† $280 million for a 1.6 percent stake in Facebook. ($10 more millions and they reach only half of what New Corp paid for myspace)

The bid comes just a couple days after Yahoo posted weak fourth quarter results and announced plans to cut 1,000 positions.

Among the many benefits to the proposed deal, according to Microsoft, is that many Yahoo employees can keep their jobs:

“Microsoft intends to offer significant retention packages to Yahoo! engineers, key leaders and employees across all disciplines,” the statement said.

Although Yahoo said it would consider the offer, I believe that Microsoft is probably taking the bid public because they failed in private talks, and now they’re trying to appeal to shareholders.

A bigger dream is for all the major sites to join forces and work in harmony. Mark this day in history as it may be the beginning of a brand new better world.

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