Microsoft Says Yahoo Deal Working Better Than Expected

Microsoft Corp.’s search partnership with Yahoo! Inc. is working “better than we could have hoped” and the company is more confident that the accord will boost the prices paid for search terms, an executive said.

The arrangement, whereby Microsoft’s Bing handles the mechanics of Web search and Yahoo oversees advertising sales, is exceeding expectations, Charles Songhurst, Microsoft’s general manager of corporate strategy, said today at a conference for investors.

Yahoo began depending on Bing’s technology earlier this year to cut costs and gain market share. Google Inc.’s Web search lead helps it make more money per search because advertisers are willing to pay for wider distribution. Google had 66 percent of the U.S. market in October, said Comscore Inc., while Microsoft and Yahoo combined for 28 percent.

Microsoft, based in Redmond, Washington, struck the search accord after it failed in an attempt to buy Yahoo.

Songhurst, whose official bio lists accomplishments including, “helping kill the acquisition of Yahoo ($48 billion saved) and negotiating” the agreement to partner with Yahoo instead, was speaking at a Nasdaq conference in London.

Microsoft rose 3 cents to $26.87 as of 4 p.m. New York time on the Nasdaq Stock Market. Yahoo, based in Sunnyvale, California, gained 61 cents, or 3.7 percent, to $16.94.

To contact the reporter on this story: Dina Bass in Seattle at dbass2@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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