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July 15, 2008

Google Search Share Up, Microsoft and Yahoo! Squabble

Google's share of search is just about 70% according to the latest figures from Hitwise.  Yahoo! and Microsoft dropped fractions of a percent to 19.62 and 5.46 respectively.  That cash bribe rebate program announced a while back for Live Search has really brought them in.  This is all on the heels of news that Microsoft made a Carl Icahn brokered deal for the Yahoo! search function over the weekend which the current Yahoo! board rejected.  The reports are that Microsoft gave a 24 hour take it or leave it condition with no opportunity to negotiate.  There are various interpretations from Microsoft and Yahoo! as to how the deal's financials would stack up, with each side blaming the other for failure.  This sets the stage for the proxy fight that may determine whether Yahoo! stays an independent company, or a shell of its former self.

What happens to Yahoo! if it sells only search.  Can a Icahn led Yahoo! operate profitably under these circumstances?  What favors Yahoo!'s current board is the Icahn doesn't seem to have a plan B for running the rest of the Yahoo! properties.  Yahoo! stockholders will get some return on the sale for search to Microsoft, but may well be stuck with limited revenues from whatever is left, which likely means stock that is worth even less than today.  The best hope is that Icahn can deliver a sale of the entire company to Microsoft at a decent price.  That may be significantly less that the $33 share rejected by the Yahoo! board, but more than the stock is currently worth.   

As for the current board's approach, an advertising deal with Google, the United States Senate is holding a hearing on that, not that the Senate has anything to say about it as a regulatory matter.  The Committee will hear from representatives from Google (for), Yahoo! (for), Microsoft (against), AT&T (against), and Askthebuilder.com (for).  The Senate page for the hearing is here.

July 15, 2008 | Permalink

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