Yahoo and Microsoft in Talks for Online Search Advertising Partnership

The online search advertising market is poised to see a significant shake-up as Yahoo and Microsoft have been meeting in Silicon Valley to discuss a potential partnership aimed at challenging Google Inc. The talks, which could lead to a deal as early as next week, have sparked speculation that Yahoo and Microsoft will join forces to offer a more competitive search advertising platform.

Key Takeaways:

• Yahoo and Microsoft have been meeting in Silicon Valley to discuss a potential online search advertising partnership, which could lead to a deal as early as next week.
• The partnership aims to challenge Google Inc. in the online search advertising market.
• Yahoo CEO Carol Bartz has publicly stated that she is willing to join forces with Microsoft if the price is right and if Yahoo will have adequate access to search data.
• The potential deal could result in Yahoo receiving a lump sum of cash and billions of dollars in guaranteed payments spread over several years, as well as annual savings of at least $500 million.
• The partnership could also drive costs down for both companies, with analysts predicting that Microsoft would save hundreds of millions of dollars on marketing and research and development.
• Yahoo and Microsoft shares have reacted positively to the speculation, with Yahoo shares rising 4% and Microsoft shares marginally affected.
• Google shares, on the other hand, fell 2.8% amid speculation that the partnership could challenge its dominance in the online search advertising market.

Statistics:

• Yahoo shares rose 4% to close at $16.84.
• Microsoft shares fell 0.6% to close at $24.29.
• Google shares fell 2.8% to $430.25.
• The potential deal could result in Yahoo receiving a lump sum of cash and billions of dollars in guaranteed payments spread over several years.
• Analysts predict that Yahoo will get annual savings of at least $500 million from not having to run its own search engine.

Sources:

• AllThingsD: a technology blog that cited unnamed people at both companies.
• Associated Press (Deborah Yao).
• The Daily Star (Copyright 2009).