Google to give Yahoo stock to settle legal dispute
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By Jefferson Graham, USA TODAY
Internet search giant Google will give rival Yahoo stock potentially
worth more than $300 million to settle a long-standing patent lawsuit,
the companies said Monday.
The settlement removes what was seen as a minor legal impediment to
Google's upcoming and controversial initial public offering.
The dispute concerns patents for online advertising technology. Yahoo
subsidiary Overture Services, formerly known as Goto.com, in 2000
began offering text-based ads that pop up next to search results.
Google's similar AdWords program began in 2001.
Google has 150,000 customers using AdWords, which generated the lion's
share of the company's $962 million in revenue in 2003. Yahoo says it
has more than 100,000 Overture customers. Its 2003 revenue was $1.6
billion.
Under terms of the settlement, Overture will license certain patents
to Google, and in return, Google will pay for them with 2.7 million
shares of stock. The payment also resolves a dispute about how much
Yahoo is owed under an old partnership between the two that ended in
February, when Yahoo dumped Google in favor of its own search
technology.
American Technology Research analyst Mark Mahaney calls the swap a
"minor positive" for both companies. "For Google, the patent dispute
was something that could have gone on for years," he says. "Now, one
unknown legal risk is removed. For Yahoo, they get extra shares."
The settlement is worth about $328 million, based on the midpoint in
the $108-to-$135-per- share range that Google has established for its
highly anticipated initial public offering.
Google has been suffering from lower expectations in recent days.
Investor response to the planned IPO isn't living up to the hype.
"Internet stocks are down 20% since July," Mahaney says. "People look
at Google in relation to Yahoo as a benchmark, and Yahoo stock is off
25% in the last month. So if Yahoo has come down dramatically, they
think Google should be, as well."
Google still expects to complete the IPO later this month, according
to documents filed Monday. The company hasn't set a specific date;
many expected it to come this week.
Google is the most widely used search engine, used for 49% of all
searches, according to May data compiled by Internet measurement firm
comScore Media Metrix. Yahoo is next with 26.6%, followed by
Microsoft's MSN at 14.5%.
Accounting for the settlement will saddle Google with a loss for the
current quarter ending in September. Google warned it will absorb a
charge of $260 million to $290 million, but didn't quantify the
magnitude of the projected loss. Google earned $20.4 million during
last year's third quarter.
Contributing: The Associated Press
--
Best regards,
JanadatGmaildotcom
http://janada.blogspot.com
By Jefferson Graham, USA TODAY
Internet search giant Google will give rival Yahoo stock potentially
worth more than $300 million to settle a long-standing patent lawsuit,
the companies said Monday.
The settlement removes what was seen as a minor legal impediment to
Google's upcoming and controversial initial public offering.
The dispute concerns patents for online advertising technology. Yahoo
subsidiary Overture Services, formerly known as Goto.com, in 2000
began offering text-based ads that pop up next to search results.
Google's similar AdWords program began in 2001.
Google has 150,000 customers using AdWords, which generated the lion's
share of the company's $962 million in revenue in 2003. Yahoo says it
has more than 100,000 Overture customers. Its 2003 revenue was $1.6
billion.
Under terms of the settlement, Overture will license certain patents
to Google, and in return, Google will pay for them with 2.7 million
shares of stock. The payment also resolves a dispute about how much
Yahoo is owed under an old partnership between the two that ended in
February, when Yahoo dumped Google in favor of its own search
technology.
American Technology Research analyst Mark Mahaney calls the swap a
"minor positive" for both companies. "For Google, the patent dispute
was something that could have gone on for years," he says. "Now, one
unknown legal risk is removed. For Yahoo, they get extra shares."
The settlement is worth about $328 million, based on the midpoint in
the $108-to-$135-per- share range that Google has established for its
highly anticipated initial public offering.
Google has been suffering from lower expectations in recent days.
Investor response to the planned IPO isn't living up to the hype.
"Internet stocks are down 20% since July," Mahaney says. "People look
at Google in relation to Yahoo as a benchmark, and Yahoo stock is off
25% in the last month. So if Yahoo has come down dramatically, they
think Google should be, as well."
Google still expects to complete the IPO later this month, according
to documents filed Monday. The company hasn't set a specific date;
many expected it to come this week.
Google is the most widely used search engine, used for 49% of all
searches, according to May data compiled by Internet measurement firm
comScore Media Metrix. Yahoo is next with 26.6%, followed by
Microsoft's MSN at 14.5%.
Accounting for the settlement will saddle Google with a loss for the
current quarter ending in September. Google warned it will absorb a
charge of $260 million to $290 million, but didn't quantify the
magnitude of the projected loss. Google earned $20.4 million during
last year's third quarter.
Contributing: The Associated Press
--
Best regards,
JanadatGmaildotcom
http://janada.blogspot.com
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