Microsoft and Yahoo may be getting back in the sack

Published Date
20 - Jul - 2009
| Last Updated
20 - Jul - 2009
Microsoft and Yahoo may be getting back in the sack
Rumours of fresh negotiations between Microsoft and Yahoo about a search-advertising deal have cropped up after a Yahoo director dropped broad hints about further talks.
"I've been a strong advocate of getting a search deal done with Microsoft," said investor Carl Icahn, who owns about 5 percent of Yahoo and is a director on its board. "It would enhance value if a deal got done, because of the synergies involved."
While both companies declined any official comments, Reuters reported that the two companies are close to the long-discussed search and online advertising deal, which could be announced in the next week, according to another source familiar with the matter who is not associated with Icahn. 
In May, Yahoo CEO Carol Bartz said that any deal to spin off or combine its search assets will require a partner with "boatloads of money." She said at the time that Yahoo was talking "a little bit" with Microsoft, but gave no details.
Bartz is known to have gotten into the good books of Steve Ballmer and Bill Gates during her stint as CEO of Autodesk.
The partnership would have Microsoft handle search capabilities for Yahoo, while Yahoo would potentially handle online advertising for the two online sites. 
This coalition would benefit both parties, as with Bing, Microsoft has the better search momentum while Yahoo’s ad shares are second only to Google. Furthermore, this handshake would be probably the only way to take on a behemoth like Google.
These talks could also be a diversionary tactic as both Microsoft and Yahoo will be announcing their financial results within the next few days. By fuelling talks of a possible tie-up, shareholders might just be more confident than the reported losses should make them feel.
Source: Reuters 

Mihir PatkarMihir Patkar