June 13 (Bloomberg) -- Google Inc., owner of the most popular Internet search engine, will get a profit boost of 15 cents a share next year from the advertising agreement struck with Yahoo! Inc. yesterday, Merrill Lynch & Co. said.

Yahoo agreed to let Google sell some of the ads it runs alongside Internet search results, seeking to shore up sales after ending talks about a combination with Microsoft Corp. Advertisers will probably shift spending to Google from Yahoo, Merrill analystJustin Post wrote in a note to clients today.

Google's share of the U.S. search market has grown to more than 60 percent as Yahoo has lost customers and personnel. That position will strengthen with yesterday's agreement, Post wrote. Yahoo, which is using the deal to fend off Microsoft, won't benefit from the arrangement over the long term, he wrote.

Yahoo will receive a percentage of the revenue Google gets through the arrangement, depending on the amount of sales generated. Yahoo said the deal may add $800 million to annual sales. Google can call the agreement off after 10 months if it generates less than $83.3 million from Yahoo over a four-month period, Yahoo said today in a regulatory filing.

Google handled almost two-thirds of U.S. search queries in April, according to Reston, Virginia-based research firm ComScore Inc. That's more than twice the share of Yahoo.

Before today, San Francisco-based Post's 2009 earnings estimate for Google was $24 a share. Analysts expect the company to earn $24.64 a share in 2009, according to the average estimate in a Bloomberg survey.

Hold, Buy

Post cut his 12-month price target for Yahoo shares to $25 from $29 and recommended holding the stock. He advises investors to buy shares of Mountain View, California-based Google and said they could reach $719 in a year.

Google climbed $18.65, or 3.4 percent, to $571.51 at 4 p.m. New York time in Nasdaq Stock Market trading. Yahoo, based in Sunnyvale, California, dropped 5 cents to $23.47, after declining 10 percent yesterday.

Microsoft dropped a $47.5 billion offer for Yahoo on May 3 after Yahoo called the bid too low. The software maker then initiated talks on an alternate transaction, which proved fruitless.

To contact the reporter on this story: Ville Heiskanen in New York at vheiskanen@bloomberg.net

Last Updated: June 13, 2008 16:09 EDT