Tech Town, NC

There is ample talk about what lies ahead for Microsoft and Yahoo, with some people even putting their money on another advance by Mr. Ballmer. With a $50 billion offer recently shelved it’s a valid question sot ask - How will Microsoft now employ that money to get some sort of return on it?

Rick Smith over at Local Tech Wire and MG Siegler of VentureBeat offer up some suggestions for the evil empire to swallow next. Among them are the favorite, AOL/Platform A, Digg, Facebook, and even Twitter. Intriguing thoughts all, but of those only AOL can approach the scale that Microsoft is (wisely) seeking.

Eric Shonfeld of TechCrunch speculates that the lack of movement in Time Warner’s stock price today indicates that Microsoft hasn’t made any moves toward AOL, and contrasts that with the healthy rebound of YHOO today. However, he may be forgetting that Time Warner is more than just AOL, so the stock is probably a bit stickier than Yahoo’s since Yahoo’s stock is completely tied up in, well, Yahoo. Also important is that TWX has actually bounced about 3.4% since the Microsoft-Yahoo deal broke down. That movement may not be as drastic as Yahoo’s, but for a large, sticky stock, it is notable.

Finally, Sramana Mitra of Alt Search Engines has a more creative take on potential targets, claiming that for a “mere” $6 billion Microsoft could stock up on some productive Web 2.0 ammunition.

Implicit in that question is the assumption that Microsoft needs to buy something, if only to fight off boredom. But do they?

Yes, they do. The Yahoo deal is gone, but not the motivation. Google is still encroaching on Microsoft in the apps department, and is obviously dominating the search business. If Microsoft can’t give Google as much trouble in their backyard as Google gives them, they’ll be in serious trouble.