The long rumored deal between giants Microsoft and Yahoo was due to come to its final stage yesterday. However, reports have said that putting pen to paper to finalize the deal, has been put on hold for the time being.
Microsoft and Yahoo have told the SEC in a filing that they are forced to delay the final stage of their deal. When the deal was officially announced on July 29 this year, the promise was that Yahoo and Microsoft would finish negotiating the search deal by October 27.
In the filing to the SEC, Yahoo and Microsoft said they were experiencing some issues regarding the transaction; "Given the complex nature of the transaction, there remain some details to be finalized. The parties are working diligently on finalizing the agreements, have made good progress to date, and have agreed to execute the agreements as expeditiously as possible."
This deal is a result of an ongoing battle to be able to compete with search giant Google. Yahoo has been struggling in recent years to generate profit with its products and services, and last year denied several takeover bids from now partner Microsoft. In January 2008, Microsoft offered a huge $44.6bn for Yahoo, but both sides failed to agree on a price, resulting in Microsoft having to walk away from the table.
The deal, which will secure a partnership between the two companies for a period of ten years, will see Microsoft"s Bing search engine powering the Yahoo website, according to the BBC"s technology page. Yahoo will, as a result, become an advertising sales team for Microsoft"s online offering of products and services.
Microsoft"s titan, Steve Ballmer commented on the announcement back in July this year saying that the deal would provide the Bing search engine with the necessary scale to compete with the likes of Google.
"Through this agreement with Yahoo, we will create more innovation in search, better value for advertisers, and real consumer choice in a market currently dominated by a single company. Microsoft and Yahoo know there"s so much more that search could be. This agreement gives us the scale and resources to create the future of search."
According to Nicholas Carlston for the Silicon Alley Insiders"s website; there should be no fear about the deal becoming sour, saying that it is probably just a case of Microsoft and Yahoo "ironing out details on the deal" which will lock both companies together for ten years. Yahoo has commented on this delay, saying that "good progress has been made with the "definitive agreements" but given the complex nature of the transaction, there remain some issues which need a little more clarity and definitive details." They closed saying "Both companies are optimistic that we will be able to close this deal by early 2010."
The entire filing to the SEC can be found through the Silicon Alley Insider"s link provided above.
This deal was only made possible after Yahoo"s co-founder Jerry Yang stepped down as chief executive of the company late last year. "Only a Yahoo outsider like Ms. Bartz could do such a deal," said Tim Weber, business editor of the BBC News website. Technlolgy analyst Rob Enderie said that the move by Yahoo to partner with Microsoft "makes up for a lot of the stupid mistakes made by the preceding Yahoo administration."
Yahoo has said that the deal will boost annual operating income by $500m and secure $200m in savings, this will also give both companies a combined market share in the US search ad market of about 30%; Google will however still be the dominant force with a share of about 65%, according to an article on the BBC technology page.