Microsoft is buying when Yahoo is at its nadir rather than when it was ridiculously overvalued. Besides, when you think about it, what other company might make Microsoft’s short list to buy to stay in the game with Google. AOL? Spare me.

Microsoft founder Bill Gates offered California-based Yahoo! An unsolicited takeover offer of $44.6 billion in its boldest bid yet to challenge Google Inc.’s dominance of the lucrative online search and advertising markets.

The offer – made when Yahoo’s share price had reached a two-year low – will be hard for Yahoo’s board to resist because the company’s financial outlook doesn’t instill much confidence. Luckily for Microsoft, it is probably paying half what it would’ve had to shell out a year ago, which is the main reason we’re seeing it.

Leading members of the committee scheduled a hearing on Friday after Microsoft offer. Microsoft and Google are locked in the equivalent of an “arms race” building up computing and storage capacity to accommodate more and more of the world’s web-based computing activities.

Microsoft’s bid to acquire Yahoo! is certainly one of the largest technology mergers we’ve seen and presents important issues regarding the competitive landscape of the Internet. Indeed Yahoo needs Microsoft’s protection and resources simply to as a brand, while Microsoft needs Yahoo’s Web-savvy to help it keep up with the ever quickening metabolism of high-tech.

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The committee will hear from experts who will weigh in on whether this proposed consolidation works to further or undermine the fundamental principles of a competitive Internet.

Yahoo! has yet to say whether it will accept the offer, but analysts believe it is too good a deal for the struggling Internet veteran to refuse and those regulators are unlikely to find grounds to stop it.

The deal could reshape the landscape for high technology by combining Microsoft and one of the leading brands on the Internet.

The move comes as Yahoo! is losing ground rapidly in the Internet space to Google, a search leader which has cashed in on the market for online advertising.

Yahoo! would offer Microsoft a search engine to compete with Google’s; a popular web portal for email, shopping and news, as well as one of the most recognized brands among online users.

Google is also ramping up offerings of on-demand online software that compete with Microsoft products. Google is moving more and more into Microsoft’s territory and it was about time Microsoft went on the offensive.

Microsoft and Yahoo! websites combined get 15.6 per cent of all online traffic in the while Google gets 7.7pc of Internet visits in the country. Will this be big enough to beat Google?

Fears of a looming recession could batter US stocks this week as investors weigh a dim earnings outlook for 2008 against a view that holds shares are cheap as seen by Microsoft’s $44.6 billion bid for Yahoo.

The main sword hanging over the market is the probability that we either are or slipping into a recession.

“My sense is that the market is going to go lower, that we’re going to retest the lows of last week… and eventually I think we’re going to break them.”

Stocks rose in volatile trade on Friday on optimism over stock valuations after Microsoft’s takeover offer for Internet Company Yahoo. The bid is a 62 per cent premium over Yahoo’s share price on Nasdag before the deal was announced.

What the market would feel comfortable with is flat earnings. We’ve been in a earnings recession. That’s where you can find your opportunities.