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Article

Title: Yahoo-Google Deal Advances

Author: Karnitschnig, Matthew; Delaney, Kevin J Article Type: Company
Source: Wall Street Journal, v251 n90 pB2(1) Publication Date: Apr 17, 2008
  ISSN: 0193-2241
URL of Publication: http://www.wsj.com

A system whereby Yahoo! Inc. would outsource its search advertising to Google Inc. looks set to move forward after a test showed the system working well. The deal may help Yahoo! avoid a takeover bid from Microsoft Corp., though some believe the proposed partnership is only 'gamesmanship' as it would raise concerns among anti-trust regulators. A successful deal would not mean the end to Microsoft's bid as Yahoo! could simply pull out of the Google partnership if the Microsoft deal goes forward. A deal with Google would increase Yahoo!'s cash flow by more than $1 billion a year because Google's system for search ads generates more revenue than Yahoo!'s. The two companies are discussing ways to overcome the regulatory hurdles, including limiting the partnership to certain geographical areas or types of searches. A successful deal would also make it easier for Yahoo! to go ahead with a merger with Time Warner Inc.'s AOL, giving Time Warner a 20 percent stake in the new entity. Shareholders, however, may 'revolt' should the Yahoo! management choose the AOL deal over Microsoft's, as Microsoft has offered a premium over the Yahoo! share price. Yahoo!-Microsoft talks are stalled, but the announcement of Yahoo!'s first-quarter earnings may present a breakthrough, either strengthening or weakening Yahoo!'s hand.

Companies:
AOL LLC Google Inc
Microsoft Corp TecTerms
Time Warner Inc Yahoo! Inc

Products:
Management Strategies Search Engine Marketing

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