For Yahoo! shareholders, the temptation to snap at Microsoft's $44.6 billion hostile takeover bid is a strong one. The $31 per share offer looks impressive given that Yahoo! shares were selling for less than $20 just before the Microsoft announcement, a 45 percent decline over the last two years. Yahoo! has been adrift, still gradually sinking even after changing its chief executive. However, the Microsoft offer is not necessarily as lucrative as it appears on the surface. The deal values Yahoo!'s core business at $31 billion, a multiple of 23 times Yahoo!'s earnings. Factoring in an anticipated $1 billion cost savings, however, reduces the multiple to a modest 13. This could give the Yahoo! board some maneuvering room to negotiate a more favorable deal, possibly by outsourcing its search business. Google would certainly be willing to get access to a few million more daily eyeballs. However, there might be regulatory complications, since this would give Google fully 74 percent of the U.S. search market. As little as a year ago, regulators were scarcely aware of online search and its implications, but Google's acquisition of DoubleClick and Microsoft's of aQuantive have sharpened regulators' awareness. Microsoft also needs to proceed with some caution. Combining its online presence with Yahoo!'s gives it advantages of scale, but neither firm has been very effective in the industry--combining them could just provide Google with a 'bigger, flabbier' rival.