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 JUNE 2008 W2 ALERTYahoo Finally Says "Yes"...to Google!
Microsoft deal falls through again; Yang to Microsoft, "Clearly, it is time to move on" <June 12, 2008>As the old saying goes, “Fool me once, shame on you…fool me twice, shame on me.” Where that leaves Microsoft, a two-time loser in a deal for Yahoo…remains to be seen. But Yahoo, in an announcement released today says it’s ready to move on and has signed a definitive agreement with Google to start that process now.
The agreement with Google will provide for Google AdSense serving ads on Yahoo search  results pages and on some of its websites in the United States and Canada. Yahoo, however, retains significant control including which search queries and on which pages the Google supplied ads will appear. Yahoo additionally retains total control over the user experience, the number and placement of Google paid results, and the mix of results provided by Google, Yahoo’s Panama, or others.
In a conference call with analysts, Yang sounded firm and slightly defiant saying that all discussions with Microsoft have “concluded,” This includes both the original…and the revised Microsoft deal, which in the opinion of Yahoo’s Board of Directors, was “not in the best interest of Yahoo stockholders.” Yang stated that as far as the Microsoft discussions are concerned, “Clearly, it is time to move on.”
Saying the deal represents an $800 million revenue opportunity, Yang says that there will be a $250-450 million incremental cash flow improvement in the first twelve months of the agreement. The term of the agreement is ten years, beginning with an initial four-year term, followed by two three-year option periods controlled by Yahoo.
 Saying they are excited about this agreement, Yahoo President Sue Decker says a key element is the “full and unfettered control over the user experience” that Yahoo retains. Decker went on to suggest that this agreement allows Yahoo to “get the best of both worlds” to optimize supplied ad inventory based on the unique strengths the two companies have in different areas.
Although as a commercial agreement and therefore not normally covered by governmental regulatory agency oversight, the companies have both agreed to set aside a three-and-one-half-month delay period to allow the U.S. Department of Justice to review the agreement.
In a separate release that was quite brief and succinct, Microsoft stated that they have left an offer on the table that exceeds their original offer of $33 per share and that this new partnership would “ensure healthy competition in the marketplace, providing greater choice and innovation for advertisers, publishers and consumers.”
Saying, “Our alternative transaction remains available for discussion” the short announcement ended abruptly, leaving much unsaid. [Photos courtesy Yahoo and Reuters] |
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