All eyes on Friday will be focused on Microsoft’s $44.6 billion bid for Yahoo, a deal that would combine the world’s largest software maker with one of the biggest Internet media companies.

But will this combination be enough to take on Google?

Although the company doesn’t mention Google by name, it appears Microsoft thinks so, at least as far as the online ad game is concerned:

The online advertising market is growing at a very fast pace, from over $40 billion in 2007 to nearly $80 billion by 2010. The resulting benefits of scale along with the associated capital costs for advertising platform providers make this a time of industry consolidation and convergence. Today this market is increasingly dominated by one player. Together, Microsoft and Yahoo! can offer a competitive choice while better fulfilling the needs of customers and partners.

Microsoft offered to buy Yahoo for $31 per share, which it said represented a 62 percent premium above the company’s closing stock price on Nasdaq on Thursday.

The proposed deal comes on the heels of Google’s reporting disappointing quarterly results, on rising capital spending and costs for acquiring advertising customers. It was only the third time in 14 quarters as a public company that Google failed to top Wall Street profit forecasts.

Silicon Alley Insider’s Henry Blodget called the offer a brilliant move and expects it to be accepted.

PaidContent suggests the deal “adds urgency” to the idea that a Google-AOL deal may be next.

Opinions on the proposed deal range from “It’s about time” to “Shocking!”
(Reuters)

Keep an eye on:

• Former NBC Universal honcho Bob Wright said he is joining Lee Equity Partners as a senior adviser, combining with private-equity veteran Thomas Lee to seek deals in the media sector. (New York Post)
• Facebook expects 2008 revenue to grow to $300-$350 million in 2008, from $150 million in 2007, and will spend $200 million on capital expenditures, and also expects employee levels to rise to more than 1,000 in 2008 from 450. (All Things D)
• Newspaper publisher and broadcaster Gannett posted a 31 percent decline in quarterly profit due to lower broadcast and print ad sales and an impairment charge. (Reuters )
• Motorola Inc is considering splitting off its struggling handset business, which has been bleeding market share to rivals. Some speculate that these rivals could be prospective buyers. The company did not say what would become of its remaining businesses including television set-top boxes (Reuters)

(Photo: Reuters)