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Yahoo! sees up to $450 million cash flow from Google deal, says 'less value' from search sale to Microsoft
By Lisa Kerner
Charlotte, N.C., June 25 - Yahoo! Inc. chairman Roy Bostock and chief executive officer Jerry Yang updated shareholders on the recently announced commercial agreement with Google Inc. as well as the result of their discussions with Microsoft Corp. regarding a potential transaction.
Under the agreement with Google, Yahoo!, a Sunnyvale, Calif., internet services company, will continue to provide algorithmic and sponsored search results, and will also gain the ability to run sponsored search ads supplied by Google alongside Yahoo!'s search results.
Bostock and Yang expect the non-exclusive agreement with Google to generate approximately $250 to $450 million in incremental operating cash flow for Yahoo! in the first 12 months following implementation, a Yahoo! news release said.
Google will pay a fee to Yahoo! based on revenue from click-throughs on ads supplied to Yahoo! by Google, the release noted.
The Google agreement is non-exclusive and provides strategic and operational flexibility for Yahoo!, Yang and Bostock added. In addition, the agreement does not prevent Yahoo! from pursuing other alternatives that could increase stockholder value.
Yahoo! believes Microsoft's offer to acquire its search business for $1 billion would have an adverse effect on Yahoo!
The deal with the Redmond, Wash., software company would leave Yahoo! without the operational control of search assets and technology, the release said.
In addition, Microsoft's proposal would have "generated substantially less value for Yahoo! stockholders than Microsoft has suggested," Yahoo! stated.
Bostock and Yang also addressed the director elections, urging shareholders to reject Carl Icahn's slate and his "ill-defined agenda."
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