Microsoft's unsolicited $44.6 billion tender offer for Yahoo Feb. 1 set off an absolute firestorm in the tech media and blogging world, with articles devoted to every detail of the unfolding drama between Microsoft, Yahoo, Google and somewhere on the peripheral, AOL. But there was one little smidgen of detail that, by and large, escaped full inspection: UBS analyst Heather Bellini's go-round with the Microsoft brass during Friday's Q&A with press and analysts that inadvertently shed some light on the potential pitfalls facing Microsoft in this deal.

The bottom line: How is Microsoft going to transform its slogging Online Services Business, which includes Search, MSN and Windows Live, into a fast moving, revenue generating business unit by adding another industry slow mover?

Here's the text of the back-and-forth between Bellini, Microsoft CEO Steve Ballmer, platform services executive Kevin Johnson and CFO Chris Liddell (who got about two words in edgewise):

Q: Heather: Steve, typically revenue synergies in software deals have been allusive, at least that's what us in the industry would remember. Can you talk a little about the revenue synergies you would expect [with Yahoo!], why you would expect to get them, and over what time frame you would expect to see this play out?

A: Steve: this is a software based business; it's an advertising revenue gain. The dynamics of advertising revenue are very much different that software revenue. But maybe I'll let Kevin put that it in perspective

Heather: That's why I thought it would be helpful to put it into perspective for everyone

Kevin: The online advertising industry is an industry where scale matters. Scale economics come into play in driving yield of ad servicing, whether it's search or non-search related ads. So by aggregating critical mass of inventory on a single ad platform, it enables that ad platform to drive higher yield for publishers. So there's a set of things, when you look at synergies, some of those scale economics can kick in pretty rapidly when you just look at the simple step of combining search related ad inventory on a single ad platform. Other areas of scale economics and revenue opportunities are going to come longer term, as we continue to roll out more capabilities and build out more capability and innovate around things like behavioral targeting. That's going to unlock more value from a revenue standpoint. So scale matters. There are some things that are short term and others that are longer term.

Q: Heather: So looking at where your operating margins are versus Yahoos, how fast once the deal closes, do you think we could see the margin for the combined company ramp back--which would appear a lot closer to the corporate average?

A: Steve: I don't think that's a good way to think about it. This business will have different economic dynamics than Windows, a different economic dynamics than our entertainment and device businesses. So relating things to the corporate average is probably not a good way to look at it. If you think about it, as I've said in other contexts, in some sense we have at least four different business models inside Microsoft that all need to be modeled differently.

Kevin: Heather, one of the things I talked about at the financial analyst meeting in July, when I showed the framework of the value chain analyses, we segmented this entire industry into a set of end-user service categories and the underlying ad platform. And I showed our view of the revenue size of those and each of those elements of that taxonomy had different operating characteristics and different operating income. So if you refer back to that it least gives you a sense of this particular industry and the financial dynamics behind it.

Q: Heather: But clearly margins should be moving up significantly versus what you've been reporting in this segment?

A: Chris: Heather, if I could answer that. I think you have to look at the company in three different ways. Our core business of client...

Q: Heather (interrupting Chris): I am really looking at it in the OSB segment

A: Steve: Yeah, we've been losing money. Our plan here would not be to lose money in the future. That would be correct. So that would be margin improvement

Q: Heather: Ok, that helps.