While everything we’ve heard so far about the Microsoft/Yahoo search and advertising deal seems to have been wine and roses, it turns out that (for Microsoft at least) there are some considerable losses to be taken.
This news comes from a slide pointedly not shown by Microsoft chief executive officer Steve Ballmer during Microsoft’s Financial Analyst Meeting. Fortunately enough, a reporter for the Seattle Times did manage to get his hands on it, and throw it up on the web for all to see. It’s worth pointing out that the slide does include the words, “Net: we will lose money in first 2 years ($300m total), then start making decent return ($400m steady state).”
That said, it’s clear that the “$400m steady state” carrot is what’s kept Microsoft’s interest. It’s no surprise that Microsoft is going to be losing money on the deal to begin with, especially given the relatively high costs listed for the transition period (with Advertiser Migration alone to cost $50m). What’s important to keep in mind is that this deal, as it stands now, will last for ten years… taking a loss on the first two doesn’t seem to be so tragic an affair.
For us, the real question is why Ballmer didn’t show the slide. It’s both interesting and not catastrophically bad.
You can read more in Brier Dudley’s blog over at the Seattle Times, here. There’s a more solid breakdown of the numbers here too, for those interested.
Tags: advertising, deal, finances, loss, microsoft, search, yahoo
