Kara Swisher

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Yahoo Shares Leap on Talks News. Microsoft? Not So Much.


Yahoo shares leapt on the news, broken in this column Friday and confirmed by others later, that its CEO, Carol Bartz, was in discussions with Microsoft CEO Steve Ballmer about a possible commercial advertising and search partnership.

Yahoo’s stock rose 7.05 percent, or 95 cents a share, to close at $14.42.

In honor of that, Yahoos today must be going to the Internet giant’s homepage and clicking on its famed exclamation point, which causes the page to, well, sound off with a hillbilly Yahoooooooooo!

It is a stellar rise, considering that Yahoo (YHOO) shares have been depressed for a long while, with minor ups and down, but sitting in the lackluster low teens for a while. The stock has not seen close to $15 a share since last October, in fact.

Microsoft (MSFT) shares got no boost from the news, declining a scant .41 percent, or eight cents a share, to close at $19.59.

That might change if the talks between the pair and other execs at both companies, which are preliminary and wide-ranging, result in a significant deal.

There are many scenarios, such as one in which the companies swap online advertising assets and deliver services to each other.

In that interesting plan, Yahoo might take over all of Microsoft’s display and premium advertising business to sell along with its own, while Microsoft would run the search advertising business for the pair.

Such a deal, which plays to each company’s strengths, would bind the two closely together, even though they still compete on many other fronts in the Internet space.

Plus, it would give the two a major advantage in display advertising over search ad giant Google (GOOG).

Stifel Nicolaus analyst George Askew in a note said that display ad data show that Yahoo and Microsoft together reached 86 percent of online unique users in a recent survey. Google had a 78 percent share, mostly via its YouTube video service unit.

Most other Wall Street analysts were bullish on the idea of a Microsoft-Yahoo deal too.