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Yahoo Filing Reveals Details of Microsoft Deal

Posted by Soulskill on from the all-chairs-must-be-bolted-to-the-ground dept.

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."

8 of 65 comments (clear)

  1. Only one problem... by Kratisto · · Score: 4, Insightful

    This deal assumes that people will use anything other than Google. There is no difference between zero dollars times 93 percent and zero dollars times 83 percent.

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    Conscience is the inner voice which warns us that someone may be looking.
    1. Re:Only one problem... by Guse · · Score: 4, Interesting

      That's a cute statement, but while Google's market share is dominant (like 67% maybe), I want to say that Yahoo has about 12% of the market... which is a pretty darn significant amount. Combined with Microsoft's share (which around 9%), you're looking at over 20% of all online ads. No, Google isn't worried, but I think that it's actually a pretty good deal for both sides.

    2. Re:Only one problem... by sharkey · · Score: 5, Interesting

      There are a couple folks here that use Yahoo every day: They have it set as their homepage, and the first thing they do every morning is search for 'Google' so that they can get to web sites.

      Sad, but true.

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      "Outlook not so good." That magic 8-ball knows everything! I'll ask about Exchange Server next.
  2. yahoo should have accepted the original offer.... by Shakrai · · Score: 5, Insightful

    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.

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    We are the United States Government! We don't do that sort of thing.
  3. Yahoo gives MSFT their search engine tech too by Locutus · · Score: 3, Insightful

    I was wondering if Microsoft was going to just get all of Yahoo's search data and it was stated that Microsoft gets Yahoo's search technology along with 400 of their engineers. So just how useful is the opt-out feature when you've handed your competition all your data, technology, and engineers and you've not kept the technology up for 5 years? Answer: their opt-out clause is only good for fooling the investors and board into thinking there's a way out.

    LoB

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    "Anyone who stands out in the middle of a road looks like roadkill to me." --Linus
  4. Re:Embrace, Extend, Extinguish by sys.stdout.write · · Score: 3, Funny

    Yo dawg, I herd you like search, so I put this search engine in a search engine.

  5. Re:yahoo should have accepted the original offer.. by Seth+Kriticos · · Score: 3, Insightful

    Yahoo! shares were between $30-$40 for the last few years before the collapse. Thing is, Yahoo! did not innovate and keep market-share according to this, but they had a slow decline as people turned to Google and others more and more because of better services.

    This effectively means that they had an over inflated stock value at the time (also called a bubble). When talks with Microsoft began, a lot of actual value assessments were made, but because of the merge possibility the prices stayed hyped. Then they suddenly went down to reasonable values after the merge talks were canceled.

    This is a normal market healing mechanism. People who are into stocks should know this, make some sane assessments on the base of performance, evaluate risks and then make sane purchase decisions.

    In reality, everyone in that crowd just wants to make a quick buck without any economic reason what so ever. This is why I have zero pity for Yahoo! stock holders.

  6. If you dance with the devil by symbolset · · Score: 5, Interesting

    You WILL pay his fee.

    Microsoft always makes deals that LOOK like great deals for their partners. And then there's always a term in the details for some unlikely contingency that miraculously comes true that allows them to eat their partner. It would be interesting if it weren't the same show over and over.

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