Yahoo Filing Reveals Details of Microsoft Deal

CWmike writes "Microsoft will pay Yahoo $50 million a year for three years and will hire at least 400 Yahoo employees as part of the companies' recent search agreement, according to a filing with the US Securities and Exchange Commission. Yahoo's form 8-K, which appeared online on Tuesday, reveals a few additional details about the agreement. The deal, announced last week, will mean that Microsoft's Bing search engine will power Yahoo's search site and Yahoo will sell premium search ad services for both companies. Five years into the 10-year agreement, Microsoft can opt out of the exclusive engagement for Yahoo's ad sales services, according to the filing. If it does, Yahoo will then keep 93 percent of the search revenue generated on sites owned and operated by Yahoo, instead of 88 percent. But Yahoo can also decide to remain the exclusive premium ad sales provider, in which case it will settle for an 83 percent share of the revenue. If Microsoft doesn't end the exclusive arrangement, Yahoo's share of the revenue will go up to 90 percent."

Comments

yahoo should have accepted the original offer....

[Shakrai]

I still think I'd be pretty peeved if I owned Yahoo stock over the fact that they rejected Microsoft's buy-out offers. The last one that Microsoft made had Yahoo valued at $31/share. It's now trading at around $14.50. Given the fact that Google dominates the search engine market and Yahoo hasn't innovated anything in years does anybody really think it's likely that Yahoo will ever see a $31 share price again? They've entered an inexorable decline that will eventually end in them being bought out by someone (probably Microsoft) for a heck of a lot less than $31/share.

I'm kind of surprised that the board didn't sued for breaching their fiduciary responsibility when they rejected that offer. That was one heck of a deal for the shareholders and I'm extremely baffled that it was rejected.