Others have finally said the obvious, in regards to the Microsoft Bond offering:
Redmond, Wash.-based Microsoft is sitting on $25 billion in cash, so the company doesn’t need the bond proceeds “unless they have something big in mind,” says Reena Aggarwal, professor of finance at Georgetown University’s McDonough School of Business. Microsoft referred questions on the use of the bond proceeds to the company’s preliminary prospectus, which stated the issue would fund “general corporate purposes” that may include funding for working capital , capital expenditures, repurchases of capital stock and acquisitions.
Microsoft has wanted in on the search market for some time. As all internal development efforts lead to sub-standard results leading to a lack of penetration in the search market.
If you know anything about Microsoft, their growth is based on technology acquisition. While still a software company, the majority of their “new” ideas are things others created. MSFT swoops in, makes a purchase and brands good as Microsoft products.
My guess is that leadership at MSFT sees an opportunity and will buy their way into a competitive position by picking up Yahoo! If a deal cannot be had with Y!, look for Microsoft to go after Ask.com.