$45B, and a 62% premium over current stock price, Microsoft presented the Yahoo! BOD with a great offer...financially. As social media goes, Yahoo! has done a great job learning and engaging people. Their search results are better than MS and Panama is a great tool.

In the short term, Yahoo! gets a financial shot in the arm from this with the MS deep pockets. But, in the long run, it is MS that benefits the most from a merger. Take Steven Ballmer's letter (or at least a part of it):

"Today, the market is increasingly dominated by one player who is consolidating its dominance through acquisition.Together, Microsoft and Yahoo! can offer a credible alternative for consumers, advertisers, and publishers. Synergies of this combination fall into four areas:..."

Not even thinly veiled, this reference to Google demonstrates Microsoft's inability to beat Google solo. Even long term, MS is not culturally in the right position to play the way Google does. They need Yahoo!. Not just the media prowess and social knowledge. More than anything, they need the culture.

But, will the culture that may allow Yahoo! to compete with Google (in the long run) survive a Microsoft merger? On a pure numbers play, this is a great move. But, we are in a time when numbers are not the only factor to be weighed. Will the combine Microsoft / Yahoo! entity be able to take advantage of the new position they create? I am not so sure.