Google pulls out of Yahoo advertising deal
— -- On Wednesday, Google dropped out of a proposed partnership that would have shown some Google ads on Yahoo pages. It did so because "it's clear that government regulators and some advertisers continue to have concerns," Google Senior Vice President David Drummond said on a company blog.
The Justice Department told the companies it would sue to block the agreement on antitrust concerns. Yahoo says it will go forward solo, but tech analysts don't think that's realistic.
"Investors have punished Yahoo for not taking the (Microsoft) offer the first time around," says Greg Sterling, an analyst at Sterling Market Intelligence. "They can't wait out the recession and hope things turn around."
According to measurement firm ComScore Media Metrix, Yahoo's market share in search fell to 19% in August, from 23% the year before. Google's grew to 63% from 56%.
Microsoft, in a statement, hailed the end of the Yahoo-Google deal but declined further comment.
Scott Kessler, an analyst at Standard & Poor's, says Yahoo is worth about $15 billion, based on its current stock price.
The $47.5 billion Microsoft once offered "was a fair offer at the time," he says. "Back then, Microsoft needed Yahoo more than Yahoo needed Microsoft. Now it's a different story."
JPMorgan analyst Imran Khan, in a note to investors, suggests Yahoo should just sell its search business to Microsoft. Yahoo's current initiatives "will not prevent further declines," Khan says.
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