Microsoft comes back to the table with Yahoo.

Here’s what’s happened so far:

1. Microsoft makes an offer to buy Yahoo!.
2. Yahoo! turns down the offer because it’s “undervalued.”
3. Microsoft sweetens the pot.
4. Yahoo! tells Balmer to “talk to the hand.”
5. Carl Icahn, a major shareholder, wants to replace Yahoo!’s board so as to bring Microsoft back to the table for acquisitions.
6. Microsoft announces that it is trying to partner with Yahoo! without acquiring them outright. Microsoft likely wants to put Microsoft ads next to Yahoo!’s search results.
7. Yahoo says that it’s open to negotiating with Microsoft.

When Microsoft announced it’s proposed acquisition of Yahoo, that had a profound impact on both the price of Yahoo’s stock – and the volume. There was a similar spike in volume when Microsoft announced that the acquisition deal was off the table.

Whatever happens with Yahoo, it’s clear that in the short term, Yahoo’s stockholders are in for a rollercoaster ride and both sell-side and buy-side trading firms will try to capitalize on the volatility and volume. Of course, Yahoo is just a high profile case of an everyday occurrence – everyone’s wants a competitive advantage when it comes to responding to market changes. This is where network performance becomes critical and why trading firms are on an never-ending quest for lower latency network architectures. In fact, the TABB group estimates that a 10 millisecond latency delay could result in a 10% drop in revenues for the firm.