Microsoft + Yahoo! = Microhoo?

So, apparently Microsoft wants to initiate a takeover of Yahoo! with Cash and stock options for some $44.6 BILLION.

From the article:
"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," said Steve Ballmer, chief executive officer of Microsoft, in a press release Friday.

I just don't know. I mean I know Google is a threat to both of these two, but are things so bad? I didn't think they were. This is weird.