Yahoo and Microsoft deal: financial aspect

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


Yahoo will use Bing, a Microsoft search service, on its websites.
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Yahoo will annually receive about 500 million dollars in operating profit, in addition, the company will receive 200 million dollars by saving budget costs. Microsoft, in turn, will receive a "powerful weapon" in the fight against one of its main competitors, Google, in the form of an audience of the world's second search engine.

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

Now, after the conclusion of a cashless contract, the question arises about the division of corporate profits. Most analysts consider the scheme, according to which the joint venture plans to operate, incapacitated, since the two largest players in the network market, remaining formally independent, cannot so easily forget the long years of competition and sacrifice their ambitions to the success of the common cause. Yahoo! Shares morning fell 9%

I wonder how to change the proportion of the search? Will Microsoft and Yahoo jointly be able to create competition with Google AdWord advertising service? In principle, with a noticeable share of the search is possible. They are waiting for a long way to create functionality, but this is just solved, but attracting an advertiser is a much more complicated thing.