Sizing up Microsoft and Yahoo: Did anybody win?

the right decision for a number of reasons, including the fact that he thinks combining the two companies as proposed would have been a "disaster"; Microsoft really didn't need to be in the same business as Yahoo; $37 per share was too much for Microsoft to pay at this point; and if Yahoo doesn't come up with a solid plan, Microsoft might be able to buy it for less than $30 per share in six months to a year.

In addition, Blodgett said Yahoo should continue its outsourcing deal with Google. "Yahoo's search partnership with Google played a major role in allowing the company to fight off Microsoft," he said in his blog. "By offering the hope of immediately higher cash flow, it should also stop Yahoo's stock price from falling back to the teens."

Dana Gardner, principal analyst at Interarbor Solutions LLC in Gilford, N.H., is not sure a Yahoo-Google partnership is in Yahoo's best interests.

Yahoo will not have long to prove it can go it alone, or it will be poached by any number of companies, including Microsoft, Gardner said in an e-mail.

Yahoo has to practically reinvent itself as a culture and become urgent about being a stand-alone Internet company but with the best partners for content, ads, media and communications, he said.

"Yahoo needs to create a cloud computing value that helps it compete against Google," Gardner said. "If Yahoo gets too close to Google, it will diminish in importance over time."

The clock is also ticking on Microsoft, he added.

"[Microsoft] needs to become No. 1 or No. 2 in online consumer and business 'something' before its Office and desktop Windows franchises go into slow growth and/or maintenance mode," Gardner said. "Microsoft also needs to become a better partner to media companies and to develop the technology and cloud computing [to compete] with Google on more kinds of services, even if it cannot close the gap on search."