If you haven’t seen it, you should read John Siracusa’s take here (funny in large part because of the quotes). I seem to recall reading that Yahoo is hoping to be bought by Apple instead, but I’m sure Apple will have nothing to do with this.
Since Jobs returned to Apple, he has been relentlessly focussed on turning Apple into a well defined set of individually profitable businesses with clear interlocking synergies (look at this list: Mac, OS X, iPhone, iTunes, iPod, Content Creation Software, and AppleTV — each makes money on its own and benefits from at least two of the other businesses). This is precisely the kind of company Apple is today, the kind of company Microsoft used to be, and the kind of company Yahoo has never been. Apple needs a bunch of ill-defined and not necessarily profitable or synergistic new businesses like a hole in the head. (And so does Microsoft.)
Anyway, I think this deal is the best thing ever. If we’re really lucky, Microsoft will insist on moving all of Yahoo’s services onto Microsoft platforms.