Never mind the Twitter speculation -- there's bigger fish to fry this morning, as Microsoft has proposed (and we must reiterate: proposed) to acquire Yahoo! Here's the quote from the Microsoft Press Release:

"Microsoft Corp. (NASDAQ:MSFT) today announced that it has made a proposal to the Yahoo! Inc. (NASDAQ:YHOO) Board of Directors to acquire all the outstanding shares of Yahoo! common stock for per share consideration of $31 representing a total equity value of approximately $44.6 billion. Microsoft's proposal would allow the Yahoo! shareholders to elect to receive cash or a fixed number of shares of Microsoft common stock, with the total consideration payable to Yahoo! shareholders consisting of one-half cash and one-half Microsoft common stock. The offer represents a 62 percent premium above the closing price of Yahoo! common stock on Jan. 31, 2008."

Whether Yahoo! accepts the offer, or enters into negotiations, remains to be seen. First thoughts here at Download Squad? Assuming it goes ahead, what does that mean for the likes of Flickr? Does this suggest that Microsoft is choosing to acquire the momentum of an already-well-known services company instead of internally developing its Windows Live (nee MSN) services? The deal is primarily focused on the bringing together of Microsoft and Yahoo!'s advertising platforms, but the other services that form part of Yahoo! certainly add another dimension to the deal.

More on this as we have it -- Yahoo has, at the time of writing, not published any press releases about the Microsoft offer.

Update: Microsoft is to host a Press Conference Call at 05:30am PST / 08:30am EST to discuss the proposal.
Update 2: Yahoo! stock is up 60% in pre-market trading.
Update 3: Yahoo! is to "evaluate this proposal carefully and promptly in the context of Yahoo!'s strategic plans and pursue the best course of action to maximize long-term value for shareholders."