Yahoo and Microsoft deal: financial aspect

Yahoo and Microsoft, the failed merger of which shocked the market last spring, announced a deal to create a search and advertising service.


Yahoo will use Bing, a Microsoft search service on its sites.

Yahoo will annually receive about $ 500 million in operating profit; in addition, the company will receive $ 200 million in cost savings. Microsoft, in turn, will receive a “powerful weapon” to combat one of its main competitors, Google, in the form of the audience of the world's second search engine.

The most interesting is the financial component of the transaction. Yahoo.com joined Microsoft, virtually ceased to exist as an independent search, and at the same time did not receive a dime for it. Obviously, things are going really bad at the company, because at the very beginning of the negotiations, when Microsoft offered almost $ 45 billion for Yahoo.com. Search engine management considered this amount too low and refused the deal.

Now, after the conclusion of a non-cash agreement, the question arises of sharing the profits of companies. Most analysts consider the scheme according to which the joint venture plans to work as incapable, since the two largest players in the network market, having remained formally independent, will not be able to so easily forget the long years of competition and sacrifice their ambitions to the success of the common cause. Yahoo! Shares in the morning fell by 9%

I wonder how the search shares will change? Will Microsoft and Yahoo work together to compete with Google AdWord? In principle, with a significant share of the search, this is possible. They are waiting for a long way to create functionality, but this is just solvable, but attracting an advertiser is a much more complicated thing.