MediaFile

A Yahoo and Microsoft deal? Search me

February 26, 2009

Two days ago, Microsoft CEO Steve Ballmer said Yahoo should team up with his company on search so they can take on Google. That’s not a new idea; after all, Ballmer’s been talking about a search deal of some sort at every public forum for months.

But then, Yahoo CFO Blake Jorgensen sent out a message loud and clear the following day, endorsing the idea of a search partnership. Yahoo is “not opposed” to doing a deal on search, he said, adding that such a deal could be in the form of a partnership or a sale of it search business. When Carol Bartz took over as Yahoo CEO last month, she said her first instinct was to hold on to search, but of course, “everything is on the table.”

So could something be brewing on that front?

Collins Stewart’s Internet analyst Sandeep Aggarwal thinks so. In a research note today, Aggarwal writes the “posturing” from both sides suggests that a search deal is in the offing:

Less than 36 hours after Microsoft’s CEO mentioned about increasing likelihood for a possible MSFT/YHOO search deal due to recent management changes at Yahoo (new CEO), yesterday Yahoo’s CFO essentially not only expressed Yahoo!’s interest in a search deal but also publicly set the stage for some possible negotiations with Microsoft. As we highlighted several times before, we continue to believe that a MSFT/YHOO search deal is very likely and appears to be a near-term event. We believe that a search deal with Microsoft can provide $8 to $10 per share lift to Yahoo.

Aggarwal even goes so far as to suggest that the next step for a possible search deal between Microsoft and Yahoo is the deal announcement itself. Do you think Ballmer and Bartz will be shaking hands soon?

Keep an eye on:

  • Don’t write off Steve Jobs yet. Apple tells shareholders he will return. (New York Times)
  • Gannett slashed its dividend 90 percent, but if you’re an investor in publishing companies, maybe you’re just happy it didn’t get scrapped entirely. (USAToday)
  • Cablevision posts a loss on Newsday writedown. (Reuters)
  • If Apple can make mobile phones, why can’t Nokia make laptops? (Reuters)

(Photo: Reuters)

Comments
2 comments so far | RSS Comments RSS

I’ve always respected Microsoft for their products, services, people and business acumen. On the other hand, my opinion of Yahoo has plummeted from middle of the road to sub-basement – they are to the online world what Sears and K-mart are to retail. If Microsoft, with their talent and resources, cannot better take-on Google by themselves, then my opinion of Microsoft is misplaced. Any relationship between Microsoft and Yahoo is clearly an indication of Microsoft’s weakening, and not a promise of combined strength. I can think of few companies who are so close to plunging off the cliff than Yahoo – and the world won’t notice their demise for a nano-second!

Posted by Bill | Report as abusive
 

Wouldn’t the Yahoo/Microsoft search partnership be anti-competitive, reducing a two horse race to one.
Users are not forced into using Google search and yet it remains hugely popular, they simply provide a superior product and this refects in it’s market share. If Yahoo or Microsoft improved usability and added some innovative features they could claw back some market share.

Googles search dominance is often drawn as a comparison to Microsofts Windows monopoly, there is nothing stopping users switching from Google to Yahoo or elsewhere and this is an easy and quick thing to do. Additionally, Yahoo and Microsoft offer the number one and two IM Client and email services wouldnt this be further cementing a monopoly of sorts in internet services?

If such a deal where to be agreed, I would certainly see the Europeans examining this very closely, it is surely anything but a done deal. Again this seems to reduce consumer choice rather than offer any benefit. This deal is purely beneficial economically rather than to the end user in my view, Google search popularity are the fruits of it’s labour and deserved.

Posted by Caleb | Report as abusive
 

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