Yahoo Strikes Deal With Google as Microsoft Talks End
Hollywood Newsroom is now Buzz Newsroom! Visit and bookmark our new site. Buzz is bigger and better, including sports, world news, gadgets and the entertainment news that you're used to. Same staff, just more stuff! Why Fark, Drudge and Huffington when you can Buzz!?Yahoo! Inc. agreed to let Google Inc. sell some of the advertisements it runs alongside Internet search results, seeking to shore up sales after ending talks with Microsoft Corp. about a combination.
The deal may add $800 million a year to sales, Sunnyvale, California-based Yahoo said today in a statement. The companies will delay implementing the program for up to three and a half months to give the U.S. Justice Department time for review.
Yahoo shares sank 10 percent today after the company said talks with Microsoft failed. The partnership with Google may boost the amount of money Yahoo gets when people click on ads, part of Chief Executive Officer Jerry Yang’s effort to deflect criticism from investor Carl Icahn, who blamed Yang for scuttling a $47.5 billion bid from Microsoft.
“Abdicating search to Google puts Yahoo in an untenable strategic position in order to obtain short-term gains,” Soleil Securities Group Inc.’s Laura Martin said in an interview. The Los Angeles-based analyst advises investors to hold Yahoo shares.
The agreement, which covers sites in the U.S. and Canada, may add as much as $450 million in operating cash flow in the first 12 months, Yahoo said. The partnership isn’t exclusive, meaning that other companies in addition to Yahoo and Google will be able to sell ads to appear on Yahoo’s pages. Yahoo’s revenue last year was $6.97 billion.
- from Bloomberg