Horton Hears a Microhoo

It's true that if you head out to your local multiplex today, you can catch the debut of the full-length animated film Horton Hears a Who. But despite what the title may suggest, this isn't a movie review, folks.

The Dr. Seuss classic details the travails of Whoville, a tiny community on a speck of dust that is doomed to perish unless Horton -- a lumbering elephant who is the only one able to hear the Whoville cries -- can convince everyone else of its existence.

If the tale feels familiar, that's because you're currently seeing it play out in real life between Microsoft (Nasdaq: MSFT  ) and Yahoo! (Nasdaq: YHOO  ) .

Yahoo! is Whoville, a dot-com has-been rendered practically silent in recent years as it battles the confident Google (Nasdaq: GOOG  ) . Microsoft is Horton, and this has nothing to do with Steve Ballmer's physique or his clumsy dance moves.

No, Microsoft is Horton because it's trying to defend its extravagant bid on a speck that has been deemed infinitesimal by Mr. Market compared to fast-growing search-engine rock stars like Google and (Nasdaq: BIDU  ) .

The Dr. Seuss story has a happy ending: Horton is able to persuade the Whos of Whoville to come together in a last-ditch effort to be heard and recognized by the masses. The boardroom version of the story seemed doomed to a darker fate, with the Yahoos of Yahooville ignorant as to their worth in the marketplace and the urgency of being rescued.

Things may be changing.

Marketwatch claims that Yahoo! and Microsoft met earlier this week, according to an unnamed "person familiar with the situation." The two companies obviously didn't come to an agreement, but at least it's refreshing to see the two giants humble enough to try to come to a peaceful resolution.

Fear probably got the best of Yahoo!'s ego. It's been holding out for better offers, but they don't appear to be coming. Rumored bidders like News Corp. (NYSE: NWS  ) and Time Warner (NYSE: TWX  ) have either denied interest or moved on with new acquisitions. There is no reason for Microsoft to bid against itself to sweeten an already rich offer.

However, the real reason why the Yahoos of Yahooville may be quivering in their booties is that industry observers are suggesting that Microsoft may lower its bid if Yahoo!'s quarterly report next month disappoints.

So should Yahoo! investors see their company's move as a show of goodwill toward a generous buyout offer, or as an admission that April's report is going to be a stinker? Either way, Whoville seems suddenly open to Horton's lifesaving trunk.

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