Against the backdrop of a disappointing third-quarter earnings report, Yahoo is planning to team up with Google on Internet search and advertising for some little leverage – but whether the Justice Department would allow this is another concern.
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Yahoo on Tuesday announced a revenue drop by 8% to $1 billion, after settling ad commissions; and the report is not much different from last year’s revenue for the same quarter. This current report indicates the ninth time that Yahoo’s revenue would drop or remain the same to the previous year within the last 11 quarters – forcing CEO Marissa Mayer to think it is high time she got some help from old friends at Google, where she left in 2012.
Based in Sunnyvale, California, Yahoo may also be forced to do something about its remaining stake after it had been spinned off from China’s Alibaba Group.
Yahoo had first tried to collaborate with Google in 2008 when Microsoft attempted to take over, but the Justice Department blocked on the collaboration citing the possibility of thwarting competition. But then Yahoo had been able to secure a deal by using Microsoft’s Bing search engine.
If this second attempt to use Google’s expertise in Internet search and advertising scales through, Yahoo may not dump Bing but will mix search results from Google’s search engine. Considering the fact that Yahoo’s search market has declined over the past seven years while Google still controls two-third of search requests in the US, it is possible that the Justice Department approve the partnership.
Meanwhile, projected earnings for the fourth quarter ending December is between $920 million and $960 million, signifying an 18% to 22% revenue decline compared to the past year. And this may be Yahoo’s largest quarterly decline since May resumed office as CEO in July 2012.
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The company still has about 384 million shares worth about $28 billion in Alibaba, and investors are encouraging Yahoo to move them to a new company known as Aabaco Holdings so as to prevent being taxed in Alibaba by the Internal Revenue Service. And whether the move will guarantee not being taxed by the IRS is another issue to consider.