Count corporate raider (and big Yahoo shareholder) Carl Icahn among the new Yahoo-Microsoft search deal’s few big fans.
“I think it is an excellent deal, and Yahoo CEO Carol Bartz and her team did an excellent job under the circumstances,” Icahn told BusinessWeek. “I agree with [Microsoft CEO Steve] Ballmer that the deal benefits Yahoo in that Yahoo gets 88% of the search revenues under the agreement,” he said.
Sure, but how about the part that gives Microsoft an incentive to compete with Yahoo for search market share — even after they’re partners? It’s true, Yahoo gets 88% of the search revenues for search ads on Yahoo’s site. But it gets zero revenue for premium search ads on Microsoft’s site — even though it has to sell them, Barclays analyst Doug Anmuth noted last week.
And what about the massive logistical, integration, and regulatory challenges? And the period of disorganization during which Google could easily gain more ground?
Sure, it’s possible that this deal will be the greatest thing that ever happened, or lead to a broader Microsoft-Yahoo takeout offer.
But with Yahoo’s stock pounded since the deal was announced — down 16% — and especially since Icahn showed up at Yahoo last year, pushing Jerry Yang to do anything with Microsoft — he also has an incentive to say things to get his shares moving the other way.
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