By
Rick Aristotle Munarriz
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August 1, 2009
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Microhoo has become Microwhat. Microsoft (Nasdaq: MSFT ) finally landed the search engine deal with Yahoo! (Nasdaq: YHOO ) that it's been craving all along. Its percolating Bing will fuel the search results at Yahoo.com. Microsoft's AdCenter will become the paid search platform for both companies.
Yahoo! will receive most of the revenue that Microsoft generates on Yahoo.com, but it's probably not enough. Investors certainly felt that way, sending Yahoo!'s stock lower after the deal was announced.
This is an anticlimactic ending -- and paid search surrender -- for Yahoo!. There is no buyout. Yahoo! sees incremental returns of $500 million in annual operating profits, but it also comes at the expense of letting Microsoft steal the show in the battle against Google (Nasdaq: GOOG ) .
It's a desperate deal. CEO Carol Bartz has only been on the job for a few months, so the halo wasn't wearing thin. With $4.2 billion in the bank, it's not as if Yahoo! needed the money.
I guess I'm not the only that expects more out of Yahoo!.
Briefly in the news
And now let's take a quick look at some of the other stories that shaped our week.
- The "Cash for Clunkers" promotion kicked off on Monday. Drivers can receive as much as $4,500 for their trade-ins, as long as their new cars offer at least four more miles per gallon in fuel-sipping efficiency. This is a great deal for battered automakers including General Motors and Ford (NYSE: F ) . This is also a sweet deal for Sirius XM Radio (Nasdaq: SIRI ) , as folks swap out their buckets of bolts for new cars that likely have factory-installed satellite radio receivers.
- Sprint Nextel (NYSE: S ) is buying Virgin Mobile USA (NYSE: VM ) in a $483 million deal. It's a good fit, since Sprint already owned a minority stake in the venture and serves as Virgin Mobile's stateside network. With regulators scrutinizing exclusive smartphone deals among the wireless carriers, don't expect this to trigger a wave of consolidation. It's a nice, small -- but ultimately isolated -- deal in the industry.
Until next week, I remain,
Rick Munarriz
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