Microhoo?

At long last, Microsoft (MSFT) and Yahoo (YHOO) appear on the brink of joining forces on a major Internet search alliance, thinking two is better than one if they are to challenge the mighty Google. The business press is united in declaring Microsoft the clear victor in this deal. As the Wall Street Journal writes, "Microsoft, which last year made a failed $47.5 billion takeover bid for Yahoo, would finally win what it wanted most from the Internet pioneer—huge volumes of queries that run through Yahoo's search engine." Business Week puts it more bluntly, writing Yahoo "gives up on search" by falling into Microsoft's arms. Giving a nod to the WSJ's scoop on the imminent deal, Business Week provides the following analysis (or is it an obituary?) on the once-dominant Yahoo's long fall from the top: "In a deal that presages its departure from a market it once dominated, Yahoo will essentially scrap its own efforts to best Google in search and instead rely on Microsoft's recently debuted Bing search engine," the magazine writes. Meanwhile, Kara Swisher in the WSJ's "All Things Digital" blog writes that the Microsoft-Yahoo deal will be announced as soon as today. She explains the division of labor as such: Microsoft's search technology will be featured on its sites and on Yahoo's, while Yahoo's ad sales team will sell the space to advertisers.

Staying in the world of tech/telecom M&A, Sprint Nextel (S) on Tuesday announced it would buy Virgin Mobile USA for $483 million in stock in a move aimed at boosting dwindling customer numbers. The Washington Post notes that the timing of the deal comes as consumer groups are mobilizing against a rapid consolidation in the sector, prompting Congress and the Federal Communications Commission to launch reviews of competition in the wireless industry. "Consumer groups and smaller carriers have argued that the industry has consolidated with the nation's four biggest carriers—Verizon Wireless, AT&T, Sprint Nextel and T-Mobile—serving nine out of 10 cellphone users," the newspaper writes. Big Blue keeps up its acquisition pace too, agreeing on Tuesday to buy software developer SPSS Inc., a firm that specializes in prediction-making software, for $1.2 billion, according to the WSJ.

Not too long ago only the steeliest of investors would have touched an IPO for a construction firm. But there was no hesitation this morning in Shanghai as Chinese investors bought up newly minted shares of China State Construction Engineering with a flurry that sent shares up 90 percent at one point in its first day of trading. To be sure, there is great demand for new Chinese listings that the New York Times warns "may be feeding an unsustainable bubble in asset prices" in China. A little closer to home now, and KKR is positioning one of its prized assets, Dollar General, for an IPO, the WSJ reports. The success of a Dollar General IPO will be a big test for KKR, which itself is planning to float in the United States and Europe, the newspaper adds.

Whisper it from the rafters, but could the U.S. housing market be bouncing back? So suggests a "surprisingly strong" Case-Shiller Price Index, writes the NYT. Chicago, Cleveland, Denver, and San Francisco all posted house-price increases in May, according to the benchmark residential property price index, and this news follows earlier reports that sales of existing homes "rose last month for the third consecutive time, while sales of new homes rose in June by the largest percentage in eight years." What's the cause of all this nesting? Some optimists say the market has finally bottomed out, but other more skeptical souls say that much of the activity is coming from property speculators. "Even the most enthusiastic analysts acknowledge that rising unemployment, another leap in foreclosures or a significant jump in interest rates could snuff out progress," notes the NYT.

The same week that Spotify put pressure on Apple's (AAPL) iPhone app approval policy, reports in the Financial Times and NYT today say that Google also has a beef with Apple over the rejection of a Google Voice iPhone app. Google Voice provides users free or low-cost calling, free text messaging and call routing, as well as a universal voice mailbox. This is the second Google (GOOG) application submitted for review by Apple's App Store that has been turned down in recent weeks. It all points to the "growing rivalry between the powerful Silicon Valley allies," one that puts Google CEO Eric Schmidt in a seemingly sticky position seeing that he also sits on Apple's board of directors, notes the FT. Could the pressure to reject Google Voice have come from outside Apple? "Many technology enthusiasts suspect that the driver of the ban on Google Voice was AT&T, the carrier that currently enjoys the exclusive right to provide service to US iPhone owners," the FT writes.

And finally, we could have guessed Federal Reserve Chairman Ben Bernanke had a stressful 2008. It was also an unprofitable one, apparently. Dow Jones Newswire, citing financial records the Fed chief disclosed on Tuesday, reports that as of the end of 2008, Bernanke's asset holdings were between $850,000 and $1.9 million, down from a range of $1.2 million to $2.5 million in the prior year.