Microsoft – Yahoo Deal
In a bit of irony, just days after a Times Magazine story titled Top 10 Worst Business Deals listed Yahoo’s rejection of Microsoft’s bid for their search engine as the number one worst business deal, Microsoft and Yahoo finally came together on a deal to join forces with each other.
In general, the 10-year deal will unite some search engine functions, and Yahoo will be the sales force for both companies that will compete against Google’s Adsense programs. Microsoft is paying big money into this, which Yahoo needs. Microsoft is giving up 88% of whatever revenue is generated from searches through Yahoo. What they’re getting back is the right to integrate Yahoo’s technology into their search program, which presently is known as Bing. This could mean as much as $500 million to Yahoo on an annual basis.
It’s about time this deal was made, but it had to be made by removing former Yahoo CEO Jerry Yang from the mix. Yang is the guy who made a serious miscalculation as to how much Yahoo was worth last year when Microsoft CEO Steve Ballmer first made Microsoft’s original bid, which was worth more than the Yahoo stock price at the time. Once Microsoft pulled the deal off the table, Yahoo’s stock dropped drastically, board member Carl Icahn went on the offensive and tried to takeover Yahoo, and Jerry Yang was soon gone.
None of this is meant as a “yahoo”, so to speak, in a crusade against Google. What it finally means, though, is that there will be an opportunity for true competition, and possibly bringing the prices down for some things and increasing how much one or the other decides to pay its publishers, of which I’m one, for placing its ads on our sites. What it will mean to us long term remains to be seen. For now, though, stock prices went up, and analysts seem generally happy about it.
And happy financial analysts are always good for the economy.