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LaCie, known in the United States for its external-storage products such as the LaCie Biggest, announced on Thursday its merger with Caleido, the Swiss creator of an online storage service called Wuala.

The move is a sign that LaCie intends to enter the cloud storage service market.

Unlike the established LaCie, which was founded in France in 1989, Wuala is still a relatively new start-up. Before the merger, the company's personnel included just 11 people, including two part-timers. Nonetheless, Wuala has gained substantial traction with tens of thousands of users, mostly Europeans.

Wuala's service include innovative online storage that allows its users to store, back up, access, and share files with one another from anywhere in the world. Users start with 1GB of storage but can get as much as they want, either by trading idle disk space or by buying additional storage.

According to Philippe Spruch, founder and CEO of LaCie, the merger would allow LaCie to use Wuala's innovative online-storage solution to transform the company from a hardware manufacturer to a comprehensive digital-storage provider.

Cloud storage has become a big trend with the involvement of many storage and networking vendors, such as Netgear, with its new ReadyNAS Vault, or Marvell, with the Sheeava computer.

Representatives from Piczo, a social network geared toward teens, have confirmed that the site will be rolling up into Stardoll, another social site that focuses on virtual doll accessorizing.

They'll be combining with a third site called Paperdoll Heaven to form what's called the "Stardoll Network." Then, presumably, they will have access to a stronger lineup of common advertisers.

Financial terms have not been disclosed. But to put things into perspective, Piczo says it has 30 million registered members and 10 million monthly unique visitors. Stardoll is slightly smaller. But with the biggest social sites now numbering well over 100 million members, there's no surprise that smaller players are consolidating in this difficult (to say the least) financial climate.

What's interesting is that Piczo used to be one to watch: before it was overtaken by MySpace, it was the No. 1 social site for teens in the U.K. But about a year ago, it began to hit visible trouble stemming from tepid traffic and rumored layoffs.

Social network Reunion.com has made a new friend: people search service Wink. The two have merged in a new deal that promises to make it dramatically easier to find people on the Web.

Early next year, the merger will produce "an entirely new brand," the companies said. The two have not said what its name will be, nor have financial details been disclosed. With the dual technologies of Reunion and Wink, the companies say that they will be able to search more than 700 million social-networking profiles. They'll be able to search profiles on MySpace, Facebook, LinkedIn, Friendster, AOL's Bebo, Microsoft's Windows Live Spaces, Yahoo, Xanga, and Twitter--among others.

Numbers from Nielsen last month indicated that Reunion.com, which says it receives 12 million unique visitors each month, is one of the fastest-growing social networks in the U.S. despite the fact that it's hardly on the radar of Twittering blog pundits. Its biggest demographic, according to Nielsen, is those between 55 and 64 who are looking to re-connect with friends and classmates.

"Through this merger, we're redefining the people search space by bridging existing social networks and providing consumers with the tools they need to find, be found, and stay connected," Wink CEO Michael Tanne said in a release. "We're aiming to create an entirely new online experience that simplifies people's lives by making it easy to find and keep up with everyone they know. There will be exciting developments in the coming months as we integrate our strengths and push our business forward."

Yahoo's second-largest shareholder is offering this assessment of Microsoft's proposed acquisition: Microsoft will need to "enhance its offer" to complete the deal; Yahoo will be in a "tough spot" if it wants to remain independent.

That judgment was included in the latest Legg Mason Value Trust newsletter by Bill Miller, the chief investment officer of Legg Mason Capital Management, which holds more than 80 million Yahoo shares.

Although the newsletter was released one day before Yahoo issued its rejection to Microsoft's buyout bid and Microsoft responded to Yahoo's rejection letter, some of the comments appear to still be current.

"We think it will be hard for Yahoo to come up with alternatives that deliver more value than Microsoft will ultimately be willing to pay," Miller said in the newsletter.

And Miller characterized Microsoft as needing to do the deal. Said Miller: "We think this deal is a strategic imperative for Microsoft."

Since Microsoft floated out its unsolicited buyout bid of $44.6 billion on February 1, Legg Mason has had conversations with both Steve Ballmer, Microsoft's chief executive, and Jerry Yang, Yahoo's founder and chief executive.

"It has been reported that Microsoft has been discussing a combination with Yahoo for well over a year and that it had been prepared to pay over $40 per share previously," Miller stated in the newsletter, noting that his firm is not able to determine the accuracy of the reports. "Our own valuation work puts the value of Yahoo in the range of those reported numbers, though, and we think Microsoft will need to enhance its offer if it wants to complete a deal."

Time will tell.

Microsoft says it can find $1 billion in cost cuts by combining Yahoo's business with its own Internet services operation, however CEO Steve Ballmer says the Yahoo name isn't one of the things on the chopping block.

"Yahoo, the brand, will live," Ballmer told BusinessWeek.

Even if the brand lives, though, it is unclear which of Yahoo's technologies Microsoft would adopt. A merged company would have to choose among two e-mail systems, to ad platforms and two instant messaging systems, to name just a few of the many overlaps.

Microsoft has thus far offered few details on what it might look to cut if its deal goes through, and Ballmer didn't offer much in the way of new details in the magazine interview.

Of course, the biggest hurdle at the moment is convincing Yahoo to take its offer, one which has declined in value since it was made last week.

A decline in Microsoft's stock in the days since its Yahoo bid was announced could make doing the deal more expensive, Wall Street analyst-turned blogger Henry Blodget noted Wednesday.

When Microsoft announced the bid on Friday, it offered $31 a share in cash or stock. Specifically, it offered Yahoo shareholders 0.9509 Microsoft shares for each Yahoo share they own.

Right now, both the exchange ratio and the cash price are fixed, meaning Microsoft is offering $31 in cash or roughly $27 in stock. Obviously, all the shareholders would want cash, but Microsoft has already specified that the deal is half cash and half stock.

All this is elementary at this point, since Yahoo hasn't yet come to the bargaining table. What is noteworthy, though, is that as of right now, Microsoft's offer has dropped. To offer $31 a share in stock, Microsoft would have to boost the exchange ratio, a move that would mean more dilution for existing Microsoft shareholders.

Plus, many believe that Microsoft may have to hike its bid higher than $31 a share to seal the deal, a prospect that gets even pricier if Microsoft shares don't rebound.

Microsoft declined to comment on the impact of its share drop on the cost of the deal.

It's not uncommon for investors to send shares of an acquiring company lower on word of a deal, but that doesn't make the financial realities any less real.

Yahoo co-founder and Chief Executive Jerry Yang issued another rally call to troops on Wednesday, according to a filing with the Securities and Exchange Commission.

The company-wide e-mail was Yang's second in three days. It includes not only encouragement to employees, but touts recent activities by the company that have been overshadowed by Microsoft's unsolicited $44.6 billion buyout bid.

Here's the text of Yang's Wednesday e-mail on Microsoft's merger proposal, which undoubtedly won't be his last.

Subject: Building on our strengths

yahoos --

first off, I want to thank you for the great job you're doing staying focused on executing our priorities. there's obviously been a lot of talk about yahoo! in recent days and we won't let it distract us from pursuing our transformation strategy.

roy and I have communicated about the thorough review process our board is going through right now. the board is focused on maximizing the value of yahoo!'s tremendous assets for our shareholders. and it is going to take the time it needs to do it right.

as we've said, no decisions have been made about microsoft's proposal. our board is thoughtfully evaluating a wide range of potential strategic alternatives in what is a complex and evolving landscape. and we've hired top advisors to assist through the process.

what's become clear in the past few days is how much people care about this company. we've seen a strong show of support from our users, advertisers, and publishers, reminding us how much they love our products and services. and i've heard from many of you -- and from other friends and colleagues from around silicon valley and across the globe -- that we need to do what's best for yahoo! and our shareholders. i promise you that the board is going to do that.

the microsoft interest highlights the tremendous strength of the yahoo! brand and assets: our half billion users around the world, our leading products and services, our open ad network, our technology, and most of all, our amazingly talented people.

we have a lot to be excited about and there's more good news to come. yesterday we announced a digital music partnership with rhapsody and our acquisition of foxytunes, maker of the popular music toolbar plugin. today we launched zimbra 5.0, a next generation e-mail and collaboration suite that's a great milestone in our open platform and starting point strategies. and stay tuned for exciting announcements next week at the mobile world congress.

as we look to build on the progress we've been making, i want to make sure you all realize how essential you are to yahoo!'s success. as this process moves forward, we're going to keep you informed. your hard work and strong commitment are more important now than ever before.

jerry

Jerry Yang has already gotten calls from Steve Ballmer and Eric Schmidt, but he's having trouble filling up the rest of his five faves.

Try as Yahoo might, apparently no one wants to bid against Microsoft's bulging bank account.

The Wall Street Journal reported Tuesday night that no serious bidders have emerged to rival Microsoft's $44.6 billion bid for Yahoo. The one party most interested in scuttling Microsoft's efforts--Google--faces uphill regulatory battles in almost any kind of partnership, alliance or investment it might want to do.

The clock is ticking. Does anyone other than Ballmer want to add Yang to their friends and family?

Microsoft is planning a new release this spring of its Live search product, code-named Rome.

That tidbit was mentioned Friday as part of the software giant's employee Webcast to discuss the Yahoo bid. Microsoft filed a transcript of the employee meeting on Monday with the Securities and Exchange Commission. This is just the first of many product tidbits one can expect as part of the regulatory filings being made in conjunction with the offer.

Unfortunately, Microsoft didn't share much on what can be expected with Rome. Microsoft updated its search product last September, although the company has continued to remain a distant third to Google and Yahoo in the search market.

Microsoft said it is also planning its next update for Windows Live. The company began the second generation of the Internet services suite last July.

"We are now in vision phase for Windows Live wave 3, working to get that out later this year," division President Kevin Johnson told employees during the Webcast.

We'll be doing our best here at CNET News.com to ferret out more product details, but we wouldn't say no to some help. Whether you are at Google, Yahoo, Microsoft, or somewhere else in searchland, feel free to send along your tidbits to ina dot fried at CNET dot com. There's a lot to go through, and we're bound to miss something. Plus, not all of Ray Ozzie's thoughts get filed with the SEC.

Also, I forgot to mention this, but CFO Chris Liddell noted at this morning's financial analyst meeting that Microsoft would likely have to raise money--a first for the company--to finance its Yahoo purchase.