Microsoft and Yahoo deal to be announced within 24 hours

BoomTown reporter Kara Swisher is confident from company insiders that the Microsoft and Yahoo deal will be announced within 24 hours.

Swisher cites multiple sources close to the situation, confirming some type of deal has been struck. It is not clear if the actual papers have been inked, sources said negotiations are complete.

Earlier this month Neowin reported that a Microsoft and Yahoo deal was imminent. It is expected that under the terms of the agreement, Yahoo! will be paid $3 billion upfront and will get 110% of the revenue that its searches provide after traffic acquisition costs in each of the first two years. In the third year, that figure would go to 90%.

Top executives at Microsoft–including SVP of the Online Audience Business Group Yusuf Mehdi and others flew out to Silicon Valley earlier this month to iron out the final details of the deal. It's expected that Microsoft will pay Yahoo cash upfront to take over its search advertising business.

Microsoft has been in talks with Yahoo for nearly 2 years, during which time Microsoft has evaluated a takeover bid, seen Yahoo reply to it's ultimatums and nearly miss out on a deal when Yahoo attempted to partner with Google. The Yahoo-Google partnership failed due to regulatory concerns.

According to figures from ComScore, in June Google held 65% of the search market in the US, with Yahoo at 19.6% and Microsoft on only 8.4%. Depending on the terms of the deal, this could bring Microsoft up to nearly 30% market share in the US, tripling its current share.

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32 Comments

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I must be the only one who never thought the Microhoo joke was funny. When companies merge or buy other companies they don't combine their names into a silly one. Yahoo will still be Yahoo just like the names Compaq and ATI are still around.

That's cool. I like Live Messenger it's stable and don't have much bugs hoping to use it next time when I login to Yahoo Messenger service.

justlooking said,
I think it's a waste of money, and their investment will be worthless soon enough.

have any of Microsofts big investments ever been worth it to them. I think the xbox project is close to turning an overall profit sometime soon, Zune certainly hasn't. Surface wont for a long time. Bing, we will have to see. All these projects have been money sinks, and they may have had better returns just investing the money, or giving it back to shareholders.

fibbeh said,
Can't argue with a strongly constructed and well researched argument like that!

Indeed. Succinct, cogent and thoroughly convincing.

MSN is just content now, Windows Live is services, and Bing is search-related.

It would be nice to have chatrooms on Windows Live Profile though.

See how this unfolds - ultimately MS thinks this will benefit them and unless I'm wrong, it definitely seems as if the price paid by MS now, isn't as astronomical as the first time round.