We've partnered up with Drew Curtis at Fark to run a photoshop contest:

What are we likely to see as the result of the Microsoft-Yahoo takeover?

Do your best and post it on Fark or email it to us if you want to remain anonymous. We'll post the winners next week. (Photo by AP/Mark Lennihan)

Google PR überführer Elliot Schrage has issued a diktat, we hear: No comment! Google employees are forbidden to comment "officially or unofficially" on the Microsoft-Yahoo deal. Right. Like that makes any difference. We haven't been able to get any of our Google sources to stop laughing long enough to give us an opinion.

What do we call this Microsoft-Yahoo thing, anyway? "Merger"? "Buyout"? "Elaborate game of footsie"? It's not a hostile takeover — yet. But Steven Davidoff writes in DealBook that Microsoft could go hostile if Yahoo resists. Microsoft CEO Steve Ballmer wrote:

Big daddy Ballmer, back from waking up Yang and the rest of the Yahoos with a big old bear hug letter has penned an internal memo, leaked to Alley Insider. Maybe you haven't heard that Ballmer loves this company? Now he loves two!

Commenter ex_yhoo_music writes a letter to Microsoft offering "helpful" tips on how to run its Yahoo acquisition.

Microsoft CEO Steve Ballmer is holding a conference call at 10 a.m. for his employees to discuss the company's offer to buy Yahoo. Boring. Unless he throws a chair during the phoner, we're not interested. [Silicon Alley Insider]

This morning, Microsoft CEO Steve Ballmer made the usual polite noises about "integrating" Yahoo's management into Microsoft. The reality? Come on. They're all fired, except for the geeks. If Microsoft had any respect for current management, they would have negotiated a friendly deal instead of launching a takeover. Most of the executive suite will be gone, I bet, within six months if the takeover succeeds. Here are the details on who's in and who's out, starting at the top.

The Fox Business Network had Google's Tim Armstrong on this morning to talk about YouTube, but quickly transitioned to the much bigger news of the day: the Microsoft takeover of Yahoo.

Yahoo employees must be sick of hearing from Jerry Yang. Not two days after an all-hands meeting, Yang is asking employees to dial in to a conference call this morning at 9:30 a.m. to discuss the buyout offer from Microsoft. (Anyone care to supply us with the passcode, or report on what was said after the call? Drop us a line.) Update: The call was apparently for managers only — rank and file just got a Web video from Yang posted on Backyard, Yahoo's internal employee website.

Microsoft may have just salvaged your stock options, Yahoos, but you're not out of the woods yet. Layoffs are still coming. It just might not Decker and Yang dropping the ax. But don't worry! Your employer has advice for you Check out "Bullet-Proof Yourself Against a Layoff" by Caroline Levchuck for Yahoo HotJobs, here condensed into a more digestible but still bitter pill.

Yahoo advertisers, get ready for moving pains. Microsoft's offer might be salvation for Yahoo shareholders, but Yahoo's advertising customers have plenty of headaches ahead. Yahoo has more display advertising customers on its platform than Microsoft does on its AdCenter. But because this deal is Microsoft's, don't expect Microsoft to move AdCenter customers to Yahoo's platform. Nope. Experts believe they'll be changing platforms. Again. Just like they had to do last year, when Yahoo finally introduced Panama. [Search Engine Land]

Microsoft offered to buy Yahoo for $31 per share, a 62 percent premium on yesterday's close that sets Yahoo's value at $44.6 billion Here's the Squawk Box breakdown. Check out our continuing coverage.

Like a child actor, Yahoo has always lived its life in public — and suffered for it. Its April 1996 IPO, when the company had a mere 49 employees, cast it in the spotlight long before it was ready. And like Hollywood, the stock market looks coldly on a fallen star. Microsoft's offer of $44 billion is less than the company was worth in October 1999 — before the tech-stock bubble's grotesque inflation more than doubled that to $97 billion. It has never regained its swagger.

Before the formal takeover offer came, an informal Microsoft takeover of Yahoo was already underway, thanks to Yahoo's hiring of several executives from the software giant. Some have even speculated that Microsoft has encouraged this poaching, using its ex-employees as plants to keep track from the inside on Yahoo's progress. And Microsoft has, in turn, hired its share of Yahoos. How will they fare if Microsoft's $44.6 billion offer goes through?

Microsoft's $44.6 billion offer to buy Yahoo isn't its first. It's just the first to go public. Here, we track the board-room romance back to its beginnings.

The timing of Microsoft's offer to buy Yahoo couldn't be better. Yesterday's market close — $19.11 — marked a four-year low for Yahoo. And while Microsoft's offer to buy Yahoo for $31 a share marks a 62 percent premium over that close, Yahoo share prices closed on a higher price, $31.11, as recently as November 2, 2007. Reporting earnings earlier this week, Yahoo CEO Jerry Yang and president Susan Decker promised display advertising innovations would have the company turned around by 2009. Impatient investors tanked the stock on more promises of an eventual turnaround. But would taking Microsoft's lowball offer be too rash a move? Or is it getting out cheap? Let us know in this latest Valleywag poll.

Microsoft has offered $44.6 billion to buy Yahoo in a cash-and-stock deal. Here are highlights from the conference call Microsoft is holding to discuss it.
5:35 a.m. Pacific: Steve Ballmer calls offer "significant." He called Yahoo CEO Jerry Yang last night to discuss it. A year ago, Yahoo management it "wasn't the right time" to discuss an acquisition.
5:37 a.m.: Kevin Johnson, who heads up Microsoft's Windows business and led its acquisition of aQuantive and the investment in Facebook, is talking about online-advertising industry economics. He describes it as a "scale" business in the areas of search advertising and ad serving. "Requires significant investments" in technology and infrastructure" leading to "a period of consolidation." The market is "dominated by one player" — he's obviously talking about Google. In other words, the antitrust argument has already begun.

Microsoft just offered to buy Yahoo for $44.6 billion or $31 a share, half in stock and half in cash. (Microsoft has the cash on hand.) That's a 62 percent increase over yesterday's close. The offer came as a letter from Microsoft CEO Steve Ballmer to Yahoo's board. Here's a copy.

Microsoft's $44.6 billion offer to buy Yahoo has markets moving. Yahoo share prices closed at $19.12 yesterday, but have already increased to $29.45 in premarket trading. Microsoft shares have remained around $32. The morning brings more bad news for Google shareholders. After missing fourth quarter expectations, Google share prices dropped yesterday afternoon and even further on this morning's news, from closing price of $564.30 to $517. (Photo by epicharmus)

Microsoft said it has made a cash-and-stock offer to buy Yahoo for $31 a share, according to the Wall Street Journal. The deal would value the company at $44.6 billion. The deal also offers a 62 percent premium over Yahoo's share price at market close yesterday. "We have great respect for Yahoo, and together we can offer an increasingly exciting set of solutions for consumers, publishers and advertisers while becoming better positioned to compete in the online services market," Microsoft CEO Steve Ballmer said. "We believe our combination will deliver superior value to our respective shareholders and better choice and innovation to our customers and industry partners."