Yahoo! Chief Executive Carol Bartz achieved on Wednesday what former boss Jerry Yang couldn't: A deal with Microsoft. The problem? Investors already hate it.
Shares of
This may seem strange, given that investors pilloried Yahoo! management last year for failing to conclude a deal with Microsoft, which eventually led to Bartz's arrival. But when looking at the terms of Wednesday's deal, investors could be forgiven for thinking that Bartz has gone too far in the other direction and simply given too much away.
The 10-year agreement gives
This would all be well and good if Bing was a success story, but according to Global Equities Research analyst Trip Chowdhry, that is far from being the case. "Bing is not doing well," he says. Although Comscore data for June showed Bing gaining market share slightly, to 8.4%, from 8%, Chowdhry says these were paltry returns for a $100 million marketing campaign. He says curious Web users may have tried out Bing, but they have just as quickly returned to the comfort of Google's home page.
"People have sensed that Bing is not a killer search engine," says Chowdhry. "This deal doesn’t change the industry dynamics, it maintains the status quo. What is the status quo? Google and 'others.'"
Now the pressure is on for Yahoo! CEO Bartz to justify the deal and deliver the goods. If investors feel she can't be trusted to cut a good deal, and if a united Microsoft and Yahoo! fail to snatch eyeballs away from
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