24/7 Wall St.

19 to 3. That is the line-up of Wall St. analysts who think Microsoft (MSFT) will make a hostile bid for Yahoo! (YHOO) compared to those who think the companies will peacefully negotiate a deal.

According to Reuters "Most Wall Street analysts believe Microsoft now faces a drawn-out proxy campaign to win its unsolicited takeover of Yahoo."

The question then becomes what does Microsoft win? A large number of senior management people at Yahoo! who do not want to stay. They may not be needed.  And, there are probably many engineers and marketing employees at the portal who want little to do with Redmond. So, does Microsoft end up with the portal but not its critical talent?

Microsoft’s best partner in the Yahoo! deal may be a recession. Engineers, even top engineers, may have trouble getting jobs in Silicon Valley if there is a sharp drop in economic growth.

Some of the largest tech and software firms may need to freeze hiring, Recent successes like Facebook could well curtail aggressive expansion. 

VC funds that put money into the "hot" start-ups which draw the best talent may invest in fewer and fewer new companies. Capital will be at a premium to support firms in which they have already invested. Raising cash for new VC funds will be hit by the credit crisis.

Microsoft may be the only large US company which can use the recession to its benefit.

Douglas A. McIntyre