Filed under: Deals
Yahoo! Inc.’s (NASDAQ: YHOO) search deal with Google Inc. (NASDAQ: GOOG) is playing to blended reviews on Wall Street. Yahoo! shares were trading down 6.5% at $22 a share early in Friday’s session after tumbling 10% on news that the company had broken off all talks with Microsoft Corp. (NASDAQ: MSFT).
Market analysts saw good and bad in Yahoo!’s new search deal with Google, which will place Google’s paid search results next to Yahoo!’s in the U.S. and Canada. Yahoo! said it anticipates the new revenue-sharing agreement to generate earnings of $250 million to $450 million during the first 12 months of the deal.
Though the two companies have structured the deal in an effort to appease antitrust regulators, a business agreement between the top two leaders in search advertising will undoubtedly draw scrutiny. Cowen & Co. analyst Jim Friedland anticipates Microsoft to immediately begin lobbying against the deal in Washington, although he expects that the transaction will pass muster with regulators “since the market — not Google — determines keyword pricing.”
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