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Microsoft has apparently won the bidding war for the Verizon mobile search contract that was rumored last November. According to Reuters:
Verizon Communications Inc has chosen Microsoft Corp to provide Internet search services for cell phones, in what is seen as a blow to rivals Google Inc and Yahoo Inc.
Verizon Chief Executive Ivan Seidenberg said on Wednesday that Microsoft CEO Steve Ballmer would announce the deal later in the day at the Consumer Electronics Show in Las Vegas. Seidenberg, speaking at a Citigroup conference, gave no further details.
It will be interesting to see what financial terms are disclosed and whether, per the November report, Microsoft is also paying Verizon to use Windows Mobile.
According to Michael Arrington at TechCrunch,
Interest in troubled Internet giant Yahoo has not waned, it just took a break for the holidays. A group of well known Silicon Valley executives and top investment bankers are putting together a Yahoo takeover deal that would be financed largely from debt supplied by Microsoft, we’ve learned from sources with knowledge of the proposed transaction.
Under the terms of the proposed deal, the investment group would make a takeover bid for Yahoo at a relatively low premium of around 20% to its current price of around $13
per share, valuing the company at just over $20 billion.
So what does Microsoft get out of the purported deal?
Simultaneous to the transaction Yahoo’s search and search marketing business would be sold to Microsoft under terms similar to what Microsoft proposed in June 2008 (and nothing like the bogus reports from The Times in November).
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This would leave Yahoo as an independent entity, albeit one closely tied to Microsoft both financially and through the search and search marketing products.
Here are the November 2008 rumors and the June 2008 proposal which basically involved Yahoo’s entire search operation going to Microsoft in return for guaranteed monetization of searches coming through Yahoo.
You can debate whether the rumored price would be right for Yahoo shareholders, but the real question is still why a new management team would want to run a Yahoo crippled in this way.
John Waples at the (UK) Sunday Times has revealed details of yet another purported search deal under negotiation between Microsoft and Yahoo that would have Microsoft financially supporting a new Yahoo management team in return for a 10-year operating agreement to manage Yahoo’s search business as well as a two-year call option to buy the search business for $20 billion. Aside from the Byzantine complexity of the deal, it (as always) remains hard to see why Yahoo would want to turn over one of its crown jewels to someone else. Perhaps a monetization agreement, but not a complete withdrawal from the search business by Yahoo.
Microsoft’s annual shareholder meeting is today and inevitably the question of Microsoft acquiring Yahoo came up given the recent announcement of Yahoo CEO Jerry Yang’s departure. However, Microsoft CEO Steve Ballmer again said Microsoft is no longer interested:
Microsoft Corp. is no longer interested in buying all of Yahoo Inc., CEO Steve Ballmer said Wednesday, though he told shareholders that the company would still be "very open" to a collaboration on Internet search. His comments sent Yahoo shares diving by 19 percent.
"Let me be clear," Ballmer said at Microsoft’s annual shareholder meeting. "We are done with all acquisition discussions with Yahoo."
But hope springs eternal for merger fans:
Some analysts have interpreted Ballmer’s public comments about a Yahoo buyout as negotiating posturing, and suspect Microsoft might still want to grab Yahoo at a low price, in hopes of improving their joint position in online search and advertising. However, analysts have also said Microsoft is likely to wait until next year before deciding, giving it time to watch Yahoo’s performance and study the antitrust regulatory climate in a new administration in Washington.
