Jul 30, 2009

Yahoo! shares drop 10% on news of Microsoft search deal

Yahoo's share price plummeted 10% in early morning trading on the NASDAQ stock exchange following news of a search deal with Microsoft.

The NASDAQ had only been open for one hour as investors looked to drop Yahoo shares with trade volumes reaching as high as 12 million moves in the market. Volume is the number of shares traded in a particular security during a given period of time.

Microsoft and Yahoo! both announced a search deal where Yahoo search results will be "powered by Bing" starting next year. However, share prices aren't Yahoo's only problem from the new deal.

During a conference call for investors and media, Microsoft CEO Steve Ballmer admitted the deal had "been a longtime coming." He went on to explain that "both companies benefit from scale and better economics. Consumers really will get better products," Ballmer said.

Yahoo CEO Carol Bartz admitted there would be some redundancies for Yahoo employees. "There are certainly many Yahoo search employees that will be asked to take jobs at Microsoft as they integrate the technology," Bartz said. "There will also be search employees that we look to help us on the display side... And then unfortunately, there will be some redundancies in Yahoo." Bartz continued "there will be redundancies, but it will be in the future." Bartz did not estimate on how many redundancies there would be.

If today's early indications on Yahoo's stock are anything to go by then the company is in for a rough ride in the next 6 months+ until the deal is officially finalised and approved.

Image credit: Yahoo Finance

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