The Big Micro-hoo merger is down for the count again. But like an annoying couple who break up and then get back together every week, we’re not deeming it final yet. Google on the other hand, is taking advantage of that piece on the rebound. High five, bro!
Just to recap – the much anticipated Microsoft merger with Yahoo hit a snag last month when Microsoft said peace out to an overreaching/greedy Yahoo CEO. A couple of weeks later, corporate raider and professional dealmeister, Carl Icahn, stepped in to settle it all out. He was ultimately unsuccessful in getting these two asexual pandas to screw to save their species.
Fast forward to today and Google is the one profiting. Google and Yahoo agreed on a deal where the big G would handle some of -hoo’s advertising. Google investors got excited and their stock price raised 3.5% this morning. But is this worth it?
The deal won’t take full effect for three months, because both companies are waiting to see if the anti-trust monopoly regulators have anything to interject. If it does go through, most analysts predict it will bring Google and additional $200 million in 2009 revenue.
According to a report in the NY Times today about the deal, Yahoo wants to move forward, but still disappoints the Street:
Ã¢â‚¬Å“Clearly it is time to move on,Ã¢â‚¬Â Jerry Yang, YahooÃ¢â‚¬â„¢s chief executive, said in a conference call. Ã¢â‚¬Å“This agreement with Google helps us to do so,Ã¢â‚¬Â Mr. Yang added, saying that the deal would allow Yahoo to continue to compete in its two main lines of business, search and display advertising.
Wall Street was less confident, sending YahooÃ¢â‚¬â„¢s shares down more than 10 percent, to close at $23.52, after the announcement that there would be no deal with Microsoft Ã¢â‚¬â€ not for the $47.5 billion it initially bid for all of Yahoo, or a smaller deal for any part of it.
Take away from this deal the fact that Google asserted a little muscle as the true king of search. Back in the day Yahoo might have been close on their heels, but they are too much of a mess right now to compete at all. As long as Yahoo can’t finalize a merger with someone significant, Google will stay on top.
Forbes: Google Rises On Yahoo Deal, June 13, 2008
NYT: Ad Accord For Yahoo And Google, June 13, 2008