Google victorious?

June 13, 2008

nascar.jpgBack in May, we reported that Google was in the driver’s seat when it came to Microsoft and Yahoo’s on-again, off-again merger talks. Well, Thursday’s news suggests that Google has crossed the finish line — in first place.

Yahoo turned down what sources said was a $35/share offer from Microsoft for a 16 percent equity stake, choosing instead to seal a search advertising deal with Google for up to 10 years.

While Yahoo estimated a $250 million to $450 million boost to cash flow in the first year of the Google deal, and said the annual revenue opportunity was $800 million, Wall Street was skeptical.

Yahoo shares plunged as much as 14 percent to $22.50 at one point.

Forrester Web marketing analyst Shar VanBoskirk said the competitive benefit to Google appeared to outweigh the additional $250 million Yahoo stood to make:

Google just found a way to make money off of its biggest competitor’s inventory.

Global Crown Capital analyst Martin Pyykkonen added:

Yahoo is being a reseller of Google whenever it makes sense and that is likely to be a lot of the time given how much more effective Google Web search ads have proven to be. For Yahoo’s Panama system the deal is a humbling statement.”

While Microsoft shares rose 4 percent on investor relief that it wouldn’t overpay for a risky deal, Sanford C. Bernstein analyst Jeffrey Lindsay noted:

Google has made an enormous gain strategically. This move might well have shut Microsoft out of the online space altogether…Microsoft’s current online services business is losing money…Now they are trying to attack the search market with under 5 percent share.

This is how the Wall Street Journal’s Deal Journal put it:

Yahoo destroyed itself to save itself. Microsoft tried to get stronger, but only ended up exposing its own weakness. Somehow Google emerged triumphant, effectively neutralizing its two biggest competitors.

That is what makes the Yahoo-Microsoft nonmerger such a spectacular failure. Never have so few failed so many for so much at stake.

(Photo: Kyle Busch gets out of his car in the victory lane after winning the NASCAR Sprint Cup Best Buy 400 benefiting Student Clubs for Autism Speaks at Dover International Speedway in Dover, Delaware June 1, 2008. REUTERS/Robert LeSieur)

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It’s intelligence. Google is simply more intelligent, that’s why they are so productive.

[...] in this all is–surprise, surprise–Google. As this post from Reuters’s MediaFile points out, Google has discovered a way to make money off of its biggest [...]

I for one, welcome our new Google overlords.

how Google does these things?