Democrats divided; McCain surges clear

John McCain claimed he was the front-runner in the contest for the Republican U.S. presidential nomination after piling up big primary wins across the country on Super Tuesday, according to CNN projections.

John McCain and wife Cindy arrive at the U.S. Senator's Super Tuesday party in Phoenix, Arizona.

But the race for the Democratic Party nomination remained wide open between Hillary Clinton and Barack Obama with votes evenly split between the rival senators.
Although CNN projections showed Obama winning more states overall, Clinton claimed victory in several key states with higher delegate counts, including New York, which she represents in the Senate, and California.

Latest estimates suggest the pair could be separated by as few as 20 of the 1,678 delegates at stake on Tuesday.

Some of the biggest prizes of the primary season were up for grabs on Tuesday, including Illinois, New Jersey, Missouri and Georgia, as voters made their party choices in 24 states and the U.S. Pacific territory of American Samoa.

On the Republican side, CNN projected Arizona Senator McCain to win his home state, along with California, Connecticut, Delaware, Illinois, Missouri, New Jersey, New York and Oklahoma. McCain wins big; Huckabee shines

CNN projected Republican Mitt Romney to take Alaska, Colorado, Massachusetts, Minnesota, Montana, North Dakota and Utah.

CNN projected Republican Mike Huckabee as winner in Alabama, Arkansas, Georgia, Tennessee and West Virginia.

In the Democratic races, CNN projections indicated wins for Clinton in Arizona, California, Massachusetts, New Jersey, New York, Oklahoma, Tennessee Arkansas, where her husband, former U.S. President Bill Clinton, was once governor, and American Samoa. Clinton takes California in tight Democratic race

Barack Obama has CNN-projected wins in his home state of Illinois, plus Alabama, Alaska, Colorado, Connecticut, Delaware, Georgia, Idaho, Kansas, Minnesota, Missouri, North Dakota, and Utah.

More than four-fifths of the 2,025 delegates needed to clinch the Democratic presidential nomination and more than 1,000 of the 1,191 necessary delegates on the Republican side were at stake on Tuesday.

The delegate count is key when looking at the results. Candidates need to notch up enough delegates -- rather than voter numbers -- to secure their party's nomination. See which states are the most important »

McCain turnaround
For the Republicans, it was a day that cemented McCain's remarkable turnaround since he was written off last summer as a viable White House contender by many political commentators.
On Tuesday the four-term Arizona senator, a 71-year-old former Vietnamese prisoner of war who also ran for the Republican nomination in 2000, finally felt comfortable enough to call himself the front-runner.

"Although I've never minded the role of the underdog and have relished as much as anyone come-from-behind wins, tonight I think we must get used to the idea that we are the Republican Party frontrunner," McCain told reporters as results came in. "And I don't really mind it one bit."

Microsoft's Bid For Yahoo! Yahoo Soft Bid Shakes The Start-Ups

Among the scenarios that have filled the daydreams of Silicon Valley's Internet start-ups are two happy endings: being acquired by Microsoft or being acquired by Yahoo!. So when those giants threaten to merge, as Microsoft proposed Friday with its $44.6 billion bid for Yahoo!, do the hopes of innovative young firms looking for buyouts get squashed in the melee?

The dreams may, at least, be put on hold. According to Microsoft's (nasdaq: MSFT - news - people ) most recent quarterly Securities and Exchange Commission filing, the company had about $21 billion in liquid assets--down from a peak of $60.6 billion in 2004. The layout for Yahoo! (nasdaq: YHOO - news - people )--which is a half cash-half equity deal--won't leave the $51 billion (annual revenue) software maker broke, but it may sate its appetite for acquisitions for a while.

A more likely reason that a YahooSoft deal could slow down further acquisitions is the red tape involved in a complex integration of bureaucracies. (See "A Messy Marriage.") If the deal closes, it could be months before Yahoo! and Microsoft sort out each other's businesses and are ready to begin integrating new ones, says Aaron Patzer, founder of online accounting start-up Mint.com.
"Right now, everything is going to be in flux," he says. Patzer says he had hoped to foster a partnership with Yahoo! Finance to distribute his free online accounting service. Since winning $50,000 in the TechCrunch 40 start-up, Patzer's Mint.com has also been an attractive buyout target, despite Patzer's claims that he intends to keep the business independent. Regardless, those kinds of deals may be on hold, he says.

"If you're a start-up, you need your own good revenue model now," he says. "If you were depending on getting acquired, combined with a looming recession, you could be in serious trouble in a year."

Patzer worries that even once the dust settles, a YahooSoft conglomerate won't be very friendly to start-ups. "Overall, I don't think it's great for the culture of the Valley. Yahoo! needs young, talented innovators, and the prospect of becoming part of a really large company like Microsoft is not very appealing to start-ups," he says. "They might want to be acquired, but they won't want to join an organization approaching 100,000 people." (Microsoft's head count is approximately 78,500 worldwide, while Yahoo! before the recently announced layoffs had 14,300.)
In recent months, both tech giants have been busy snapping up smaller companies. Microsoft paid $1.2 billion for enterprise search firm Fast Search & Transfer last month. It also bought a London-based Web geolocation company called Webmap in December and invested $250 million for a 2.5% stake in Facebook in October. Jerry Yang's takeover as Yahoo!'s chief executive had some startups predicting a new round of acquisitions. (See "Yahoo's Geek-Speaking CEO.") In September, Yahoo! bought up news aggregator Buzztracker, online ad network BlueLithium and e-mail client Zimbra.

But the merger and acquisition teams at Microsoft and Yahoo! might be "looking inward rather than outward" for the next months, says Jeff Clavier, founder of venture capital firm SoftTech VC, who has sold two Internet start-ups to AOL and one to Yahoo! in the last two years. "Figuring out an integration plan, who stays and who goes, what's important and what's redundant--it takes a long time," says Clavier. "They'll be stretched, and I have a hard time seeing how they could be looking at new talent and ideas."

Longer-term, Clavier says that integrating Yahoo! could make Microsoft a more appealing destination for young firms, partly due to the simple facts of geography. Owning Yahoo! would offer Microsoft better integration with Silicon Valley, and give start-ups an alternative to moving to Washington, he says. "The idea of buying a company, moving it to Redmond, making it part of 'the Borg' is no longer the model," he says, referring to Microsoft's unflattering corporate nickname.

In the meantime, the integration of the two companies may offer a competitive boost to start-ups living in the shadow of Microsoft and Yahoo!. Clavier points out that consolidation means layoffs, and layoffs mean talent that can be snapped up by start-ups. Scott Rafer, the former chief executive of MyBlogLog, a start-up acquired by Yahoo!, says that the YahooSoft deal means the two companies will be bogged down for months while his new firm, called Lookery, continues to innovate.

"We love this kind of stuff," he says. "The people who could actually do us some damage are going from slow to slower."

Lookery, an advertising network for ads that run on Facebook applications, is likely to find itself in direct competition with YahooSoft soon; Facebook struck a deal in August 2006 to place Microsoft ads on the site. Microsoft's latest deal, says Rafer, offers him a much-needed head start.

"We need to get big enough so that they can't just squash us like a bug," says Rafer. "The more time they spend worrying about which division gets merged with which division, the more time we have to grow."