Google delays Yahoo! deal

Google delays Yahoo! deal
Posted Oct 4th 2008 9:40AM by Douglas McIntyre
Filed under: Deals, Competitive strategy, Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO)

Google Inc. (NASDAQ: GOOG) and Yahoo! Inc. (NASDAQ: YHOO) agreed to delay their advertising sales partnership while the Justice Department reviews the deal. The news may look like a retreat by Google, but it undermines one of the key reasons Yahoo! gave for staying independent from Microsoft Corp. (NASDAQ: MSFT). Google was going to improve Yahoo!'s revenue.

It looks like there is some chance the partnership will not happen at all. That would justify the fact that Yahoo!'s stock is down by more than half from its 52-week high. Yahoo! indicated that the wait might be short. "The companies have agreed to a brief delay in implementing this agreement to continue our ongoing discussions with the (U.S.) Department of Justice," Yahoo! said in a statement. "We have had discussions with regulators and look forward to responding to their questions about this agreement."

The trouble is that Justice can take its own time. It's under no pressure to give an answer in short order. The news also begs the question of whether the two companies will wait for antitrust reviews in the EU and Canada.

Each day that passes without Yahoo! having a sales relationship in place with Google is a day its earnings do not recover.

Douglas A. McIntyre is an editor at 247wallst.com.

Tags: GOOG, Google, inthenews, Justice Department, Microsoft, MSFT, Yahoo, YHOO