Searching For A Huge Deal

Microsoft and Yahoo have finally signed a search engine agreement to combine forces against Google.

Microsoft Corp and Yahoo Inc inked a 10-year Web search deal to better compete against market leader Google Inc but stopped short of combining their display advertising businesses.

Yahoo shares fell 7.5 percent, as some investors were disappointed by the limited scope of the deal. Shares of Microsoft edged higher, while Google shares fell 1 percent.

"Those that were looking forward to a take-out, the deal today was rather disappointing," said Marc Pado, U.S. market strategist for Cantor Fitzgerald & Co. "The 10-year pact, it's not a bad thing. It's not as good as what investors expected."

Under the deal announced on Wednesday, Microsoft's Bing search engine will be the exclusive algorithmic search and paid search technology for Yahoo's sites, while Yahoo will be responsible for selling premium search ads for both companies.

Yahoo estimated the deal will boost its annual operating income by about $500 million and yield capital expenditure savings of $200 million. Yahoo also expects the deal to boost annual operating cash flow by about $275 million.

The Google versus The Bing now gets very real. I'm honestly wondering if this is the first step towards Microsoft acquiring Yahoo outright. We'll see. Personally, I use Google 95% of the time anyway. MS has their work cut out for them.

However, seeing they are this serious about Bing means I'm much more willing to try it.