There is absolutely no doubt that Microsoft and Yahoo are in the final stages of some sort of search/search marketing deal. And lots of Yahoo’ers are buzzing that the big announcement is today along with Yahoo’s quarterly earnings report after the markets close. But our sources are saying that while the deal is imminent, it won’t be announced today.
But Yahoo sure is being secretive about what they are announcing today. Some people who usually have access to the earnings call script are out of the loop, our sources say. Yahoo has been one of the leakiest companies in the last couple of years (remember this?), and CEO Carol Bartz may finally be trying to put the hammer down on some employees suspected of facilitating those leaks. Is something unusual being announced today? Perhaps, say our sources inside Yahoo. But they can’t say what it is besides speculation about a Microsoft deal.
But back to those Yahoo/Microsoft negotiations – sources say that a search deal is imminent. But they are also saying that Yahoo continues to push for an outright acquisition. Microsoft, after pulling their acquisition offer last May, never again expressed any real interest in buying the company. The search deal is the next best thing, and Yahoo has to take it. With Google unable to partner with Yahoo over search, there’s no one else ready to step in.
The Microsoft/Yahoo search deal would apparently put Microsoft’s new favorite child, Bing, behind Yahoo’s search product, which has a much higher market share than Microsoft’s. The deal would supposedly see Yahoo get paid $3 billion upfront, as well as pretty much all of the revenues (after traffic acquisition costs) that its searches provide over the first few years of the deal, 24/7 Wall Street reported the other day. There is also talk that Yahoo’s relatively strong display advertising business would be put in place for both companies.
We’ve previously written about what a deal like this could mean for both companies, but things have changed a bit since Microsoft completely revamped its search product. It’s still too early to tell if Bing will make any meaningful inroads against market leader Google. (And in fact, it looks like Bing may be stealing share from Yahoo, rather than Google.)
But the general consensus among users seems that they at least like Bing — something which cannot often be said about consumer-facing Microsoft products. And that has to be seen as good news if Microsoft can combine its search product with Yahoo, giving it nearly a 30% market share.
There are no shortage of rumors flying around today given Yahoo’s earnings, but remember that Microsoft also announces its earning on Thursday after the market closes. Yahoo’s stock fell 1.5% during regular trading today, but has already fallen another 2% in after-hours trading leading up to earnings. Their call is set for 2PM PT, we’ll be listening in.