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Microsoft, Yahoo May Finally Come to Terms

By Bob Blandeburgo
Associated Editor
Money Morning

While its attempt to take over Yahoo Inc. (Nasdaq: YHOO) failed last year, Microsoft Corp. (Nasdaq: MSFT) is reportedly back in talks with the search engine company and a deal could be announced later this week. 

Executives from the Redmond, Wash. Microsoft traveled to Silicon Valley late last week to iron out remaining issues in a deal that would create a search and advertising partnership between the two companies, according to The Wall Street Journal’s All Things Digital blog.

Barring a major breakdown in talks, the deal could be announced this week, the blog said, citing sources at both companies.

The deal has Microsoft paying Yahoo “several billion dollars” upfront to guarantee to take over its search advertising business and guarantee certain payments back to Yahoo. Also, Yahoo would sell premium advertising for the companies.

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Talks for the deal have been ongoing for more than a year. Microsoft’s unsolicited attempt to acquire Yahoo last year for $47.5 billion failed.
One big name pulling for the deal to happen is billionaire investor and Yahoo board member Carl Icahn.

"I’ve been a strong advocate of getting a search deal done with Microsoft," Icahn told Reuters on Friday. "It would enhance value if a deal got done, because of the synergies involved.”

Microsoft upped the search ante early last month when it launch its Bing search engine, pouring $100 million into marketing the site in a bid to take away market share from search giant Google Inc. (Nasdaq: GOOG). So far, Bing has only managed to take away share from the very company Microsoft is trying to partner with: Yahoo. As of June, Google commands a 65% market share while Microsoft and Yahoo combined hold a 28% share of search queries.

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Yahoo(YHOO) is “almost” officially toast.. (Intelligent Speculator, 7/29/09)
Microsoft Down But Not Out (Investment U, 7/27/09)
Read more on Yahoo!, Microsoft at Wikinvest
July 20th, 2009

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  1. Pingback by Yahoo Deal Could Give Microsoft's Bing the Boost it Needs to Compete with Google on 30 July 2009:

    [...] of the deal. Yahoo salespeople will sell the premium ads for both companies. Missing are the “several billions of dollars" upfront reported earlier this month by the The Wall Street Journal that Yahoo investors were [...]

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