Eternal optimist Collins Stewart analyst Sandeep Aggarwal says Microsoft (MSFT) and Yahoo (YHOO) will complete a search deal in the first quarter, if not sooner. He thinks the only holdup is that Yahoo needs a CEO. Writes Sandeep:
“By now, MSFT has probably completed basic ground work for a search deal structure with Yahoo. This is the time of the year when MSFT typically starts the annual strategy reviews process for each of its business units.”
Sandeep says the deal will probably take a “sale and leaseback structure,” wherein Yahoo would sell all of its search assets and Microsoft would pay $1 billion upfront and then guarantee $2.5 billion in annual search revenue. Yahoo would also save $700 million per year in operating expenses.
We’d like to believe Sandeep — and logically, there’s no reason not too since all relevant parties seem to agree that a Yahoo-Microsoft search deal should happen — but by now we’ve learned that when it comes to Yahoo, logic doesn’t always apply.