The Yahoo vs Microsoft battle heats up
Following a two-month hostile takeover bid from Microsoft, Yahoo signed a two-week deal with Google to display the latter’s search engine advertising platform yesterday and is still in talks to merge with Time Warner’s AOL. Google will be able to place ads alongside 3% of search results on Yahoo’s website.
Now News Corp, the owners of Fox and MySpace, have said they may side with Microsoft to pressure a takeover of Yahoo.
Although billed as a test in the US only, analysts at Citigroup estimated that if Yahoo! were to outsource its search engine advertising to Google worldwide, it could generate an extra $1 billion in cash flow to the company.
Google wants Yahoo! to remain independent, arguing that the Yahoo! Silicon Valley culture is not compatible with the Seattle software giant. But the leading internet company is also unlikely to welcome the greater competition that a Microsoft-owned Yahoo! would bring.
Separately, Capital Resarch & Management, the big US mutual fund, doubled its stake in Yahoo to 10.1 per cent.
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