Friday, June 13, 2008

Yahoo Jumps In Bed With Google

Since Yahoo and Microsoft have now officially (at least in public) said their goodbyes, it seems that the bed isn't even cold when Yahoo gets girlfriend 2.0 - Google.

It turns out that just hours after Yahoo announced that negotiations were "over" - they also announced that they had struck a four year non-exclusive deal with Google to display advertising on their site. Apparently, Yahoo has high hopes for the cash that the deal will generate - citing a figure of $250 million to $450 million in operating cash flow during the first 12 months.

Yahoo also gets to control the search terms queries and the pages on which the ads will appear. The deal also allows for Yahoo to continue to sell their own advertising from its own Panama ad platform as well. That's assuming, of course, that Yahoo doesn't get lazy and just relegate the ad serving to third parties as time goes on. We'll have to wait-and-see for the results of that one.

Also of interesting note is the fact that the deal only applies to the U.S. and Canada - leaving the door open for Yahoo to negotiate the same kind of deal with other players in other countries.

Although both Google and Yahoo say that they don't need a Federal regulatory blessing on this unholy union, they've wisely delayed the rollout for three and a half months while the U.S. Department of Justice reviews the arrangement. (Can you say "CYA"?)

Of course this doesn't mean that Yahoo is out of the woods - not by a long shot.

It's stocked tanked about 10% yesterday - but the move may just stop pissed-off-rich-old-guy Carl Icahn from totally replacing the board during their shareholder meeting on August 1st. It was actually a good move by Jerry - making Yahoo even more of an odious takeover target for Microsoft, since Icahn's plan was to appeal to shareholders that he could resurrect the Microsoft takeover deal.

It seems that with their hopes for a yummy payout dashes - some key executives are also jumping ship. Among the latest jumpers are Jeff Weiner, executive vice president of Yahoo’s network division;
Usama Fayyad, chief data officer and EVP of research and strategic data solutions; and veteran developer Jeremy Zawodny who has been with Yahoo since 1999 and helped to spearhead important projects like the Yahoo Developer Network.

This is on top of the earlier resignations/firings of Bradley Horowitz, head of Yahoo’s advanced technology division; Salim Ismail, head of Yahoo Brickhouse; and Jeff Bonforte, VP of social search.

So class, let's sum this up: Yahoo is outsourcing their ads to Google (and probably others); key folks are leaving in droves; Carl Icahn (multi-billionaire - and your largest individual stock holder) is pissed off; you're having your board meeting where your directors could get replaced in 6 weeks; your stocked tanked 10% in a single day; AND you've finally decided that portals don't matter - it's all about search - but two guys in a garage have cleaned your clock... whaddaya' do?

Jerry - it's Miller time! You're gonna' need it...

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