Yahoo! partners up with Microsoft... but why?

The big news yesterday was that Yahoo and Microsoft have come to an agreement in which Yahoo will get out of the search business and host microsoft's BING on the yahoo homepage, in return Microsoft will stop selling online advertising and let Yahoo take over that aspect of the search/ad-sales business.

weird.

Why did Yahoo turn down Microsoft's offer of $47.5 billion in May of 2008, and then a little over a year later basically give Microsoft what they wanted out of Yahoo anyway.
It makes no sense. They should have just sold the whole company to Microsoft last year.

my prediction: within 5 years Yahoo will be done. Their stock price will continue to plummet, and eventually Microsoft will pick the decent leftover parts of Yahoo like vultures pulling meat off dead bones.

so the big news yesterday really meant this:
yahoo, the internet giant of yesterday is now slowly headed to the dustbins of internet history like AOL or AltaVista.

further reading:

http://www.msnbc.msn.com/id/32193887/ns/business-us_business/
http://arstechnica.com/web/news/2009/07/yahoo-microsoft-exchange-vows-for-search-and-ads.ars
http://www.wired.com/epicenter/2009/07/microsoft-yahoo-2/
http://www.wired.com/epicenter/2009/07/yahoo-gives-up/
http://www.thebigmoney.com/features/todays-business-press/2009/07/29/microhoo
http://www.thebigmoney.com/features/todays-business-press/2009/07/30/yahoo-and-microsoft-finally-team