Ever since Microsoft made it public that they wanted to buy Yahoo, I’ve heard a lot about what Microsoft should and should not do. Some insane ideas ranged from buying SAP to Logitech.

I guess given all of this nonsense, my opinion would probably not be worse than these suggestions. So in my view, if I were Steve Ballmer this is probably what I’d do. Disclaimer: My opinions expressed in this post do not reflect any organization that I am affiliated with. You can read Microsoft’s opinion here.

First of all, since Yahoo is playing hard to get I’d retract my offer. There are many reasons as to why. First, the portal is dead. The type of model where you published news and content on a website to attract visitors is so 1990’s. Yahoo did this really well during the dot com boom but now users are becoming more sophisticated. We’re not checking About.com or MSN anymore. Instead we’re reading blogs, wikipedia and social bookmarking sites like Digg and Reddit.

Second, when you look at a list of Yahoo’s properties, Microsoft has a substitute for each one of them. Most Yahoo products under-perform the respective Microsoft product and after a merger, most of them will be dissolved anyways. So the only valuable asset is Flickr which begs the question: Is that really worth $44B?

Finally, I draw from my experiences in grade 8. When you’re at a grade 8 dance and you get rejected by a girl. What do you do? Do you keep asking the same girl to dance? NO. You don’t want to look like an idiot. You find a more attractive girl to dance with. Not only have you upgraded, now you’ve also made the original candidate jealous. THAT’S how you really play hard to get.

Speaking of the next girl, let’s talk about some lovely candidates we can hook Microsoft up with. To me Zoho would be a prime candidate. AdventNet barely sees any revenue from their Zoho division which makes their valuation a lot less than $44B. OK fine the owners probably won’t sell for a few hundred million. But, if the owners aren’t like Mark Zuckerberg, throw $2B at them and they’ll probably take the deal and run. After re-branding the products in Zoho’s portfolio, Microsoft could start printing money. Tomorrow morning they could launch Office Live 2.0 and really compete with Google Docs. “Mr.CIO, don’t like installing MS Office on each computer? Then say hello to Office Live”. They could easily convert disgruntled customers to their on-demand products and altogether block Google from ever entering the market. It’s like their cash cow just had a baby.

Just recently I’ve read another idea of Microsoft buying Salesforce.com. This is probably the most sober idea I’ve come across. Although it would be awkward to have Dynamics Live CRM and Salesforce.com in your portfolio. I see it as more of a necessary defense tactic. Do you want Salesforce.com to get more chummy chummy with Google? There are already rumours of Google Apps Integration on the way. If Google ever snatched up Salesforce.com that would leave Microsoft in a very tight situation. A new enterprise competitor would be born. Look out Microsoft. And more importantly, Look out SAP and Look out Oracle.