Slumping Microsoft Needs Yahoo

Microsoft's first quarter saw flat sales and dipping profits, all the more reason to make nice with Yahoo, Aaron Ricadela writes in BusinessWeek. Steve Ballmer has said he is ready to walk away from the attempted takeover, but with most of Microsoft's revenue coming from smaller divisions and overseas interests, his company sorely needs a big shot in the arm.

Even if Yahoo shareholders do accept the takeover bid, analysts don't see Microsoft catching up to the Google juggernaut any time soon. One calls it "a runaway train they're trying to catch. And they are two little trains trying to hook up." But staying still won't help either: "Microsoft must get this acquisition right to remain relevant in the Internet age." (More Microsoft stories.)