It’s finally out and about. Microsoft has raised a bid to buy out search portal Yahoo! for a reported $44.6 Billion at $31 per share (compared to $19+ before the announcement). It’s not a hostile take-over, something Yahoo Executive Boards are considering, though not a friendly one either. Let me get back to my last year’s question — Is Yahoo a Good Buy for Microsoft?

On the technical and services segment, there will be a some overlap in the instant messaging, email and search. However, on the fiscal front the acquisition could prove to be a saving grace to the weakening internet portal. Just look at how the market reacted to this bid:

Yahoo’s stock was at $19.18 a share on last Thursday’s closing. After the Microsoft announcement, it jumped to as high as $29.83 — a 55% increase. Looks like people are happy that Yahoo is going to get some help. The 62% premium ($31/share) Microsoft is paying for Yahoo did put a dent into the company’s stocks though which is now down by 6.2%.

How’s this going to affect the bottom line for both companies? Well, Microsoft is claiming it will help them save up to $1 billion a year. ComScore has the market share figures for US and international:

In the US, Yahoo sites have a combined lead in the number of eyeballs at 7% followed by Google at 5% and Microsoft at 4%. The combined web properties of MSFT and YHOO will bump that up to 11% or 51.3 billion pageviews. Worldwide, Google leads at 8% (166B PVs) while Yahoo has 5% (102B PVs) and Microsoft at 4% (75.9B PVs). The combined web properties for both will bring it up to 9% (180B PVs) which will take them to lead over Google.

This seemingly hostile takeover by Microsoft is a reaction to Google’s dominance in the search market. It is already losing in the online advertising space with a $245 million loss despite an overall profit increase of 79%. Buying Yahoo can bring back life to that division and even help it save some. Since the Redmond giant has tons of spare change (about 40+ Billion in gross revenues in the last fiscal year), it can afford to take up Yahoo at a premium. And for very good reason.

The million dollar question here is — what does this mean to AdSense Publishers? Well, not much actually. If anything, it could even be a positive effect. Microsoft and Yahoo advertising are primarily premium ad deals (i.e. banner ads and other big ticket campaigns). Google AdSense is more on PPC. Yes, there’s Yahoo YPN and MSN adCenter too but once these two units are combined, PPC buyers will actually consolidate their budget between two players instead of the current 3. In essence, Google AdWords will get more cut of the total budget and probably push a better AdSense CPM performance.

There’s also the likelihood that the *new* Yahoo will concentrate on expanding its PCC and network program which might fastrack the inclusion of Asian publishers. That in turn, will pressure Google to give its network of AdSense Publishers more reasons to stick it out with them. It could be thru an expanded AdSense program or a better cut in the PPC revenues (a percentage share Google has never announced publicly).

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