Microsoft and Yahoo are close to sealing a long-anticipated search-and-advertising deal, a blog owned by the Wall Street Journal reported. Representatives for both companies declined to comment.
The two companies have been negotiating the terms of the deal since March but have reportedly had difficulty agreeing on everything from what the deal is worth to technical details.
At a technology conference in May, Yahoo Chief Executive Carol Bartz said she would be happy to do a deal provided that Microsoft offered Yahoo “boatloads of money” and had the right technology.
Since then, Microsoft’s new Bing search engine, released in June, has garnered positive reviews from search experts and consumers. According to comScore, Microsoft’s share of searches in the United States jumped 0.4 percent in June to 8.4 percent, while Yahoo’s share dipped 0.5 percent to 19.6 percent. Google’s share, meanwhile, held steady at 65 percent.
“Now that it is clear Bing is successful and not just a one-week fluke, Yahoo has got to be nervous about going from the silver to the bronze medal in the search olympics, said Rick Munarriz, an analyst with the Motley Fool, who called a deal between the two tech giants “inevitable.”
In a research note Friday morning, George Askew, an analyst with Stifel Nicolaus, reported that “industry sources” say “Microsoft may be gearing up for something significant on the M&A front.” Askew said this could include a search partnership or a closer combination between the two companies.”
Askew noted that during a conference call to discuss Google’s second-quarter earnings on Thursday, Google’s Chief Executive Eric Schmidt said that search-advertising appeared to have stabilized. “We believe Yahoo will benefit from these same stabilization trends,” he said.
Kara Swisher, a co-founder of the Wall Street Journal’s AllThingsD blog, reported Thursday night that top Microsoft search executives, including Qi Lu, president of the online services group, Yusuf Mehdi, senior vice president of the online audience group, and Satya Nadella, senior vice president of online services, had all flown to Silicon Valley to discuss remaining issues.
But Swisher cautioned that a deal could fail to materialize and a source familiar with negotiations said that “activity seemed to have died down over the past month.”
Several previous efforts to make a deal have foundered. Last year Yahoo rejected a $47.5 billion offer from Microsoft for the entire company as too low and then turned down a search deal that included several billion dollars in payments in favor of an arrangement with Google. Under the arrangement, Google was to sell search advertising on Yahoo’s sites; however, that deal ran into opposition from antitrust regulators and failed to materialize.
Yahoo’s shares jumped more than 3 percent to $16.77 Friday morning on news that an agreement with Microsoft may be imminent. Yahoo will report its second-quarter earnings next Tuesday and Microsoft will report on Thursday.
(c) 2009, San Jose Mercury News (San Jose, Calif.). Source: McClatchy-Tribune Information Services.
