Oracle CEO optimistic on quick Sun profit potential
February 23, 2010
Source: REUTERS

SAN FRANCISCO: Oracle Corp Chief Executive Larry Ellison said on Saturday he expected Sun Microsystems, the unprofitable hardware maker that he bought last month for $7.5 billion, to be making a profit soon.

Oracle executives have previously declined to say how long it would take for Sun to start turning a profit, although they have promised it would add $1.5 billion to operating profit within a year. The company had posted losses of more than $2 billion in the two years prior to its sale.

But Ellison, asked by reporters how the Sun integration was going on the sidelines of a news conference on Saturday in San Francisco, said: "I think it's going really well and we expect to be profitable right away."

Some analysts are skeptical that Ellison will be able to quickly turn around Sun, which never fully recovered from the bursting of the dot-com bubble in the early 2000s that savaged demand for its high-end computers.

He made the comments in his hometown after returning from Valencia, Spain, to show off the trophy he won for defeating rival billionaire Ernesto Bertarelli in the America's Cup sailing race.

Ellison vowed to defend his title. But the 65-year-old, who founded Oracle more than 30 years ago, also said he has no intention of retiring from his position at the helm of Oracle to focus on sailing.

"I love Oracle and I love sailing, and I think I can do both," he said, after accepting a key to the city from San Francisco Mayor Gavin Newsom, who, like Ellison, wants to see the next America's Cup race held in San Francisco Bay.

"It certainly makes commuting easier," joked Ellison, whose Redwood City-based company is about 25 miles (40km) south of San Francisco.

Microsoft steps up search assault on Google
February 23, 2010
Source: REUTERS

SEATTLE: Microsoft Corp's assault on search engine leader Google Inc took a major step forward on Thursday as US and European regulators cleared the software company's search partnership with Yahoo Inc.

The 10-year deal, struck last July, is the biggest effort yet by Microsoft to establish an online business to rival Google, an area where Microsoft has lost $5 billion over the last four years.

"Microsoft really has room to throw money at this," said Kim Caughey, senior analyst at Fort Pitt Capital Group. "I think it can work. If they can make inroads in specific target areas, they could have something positive to report."

Microsoft has already made some progress with its search engine, Bing, picking up 3.3 points of market share since its launch last June. But Bing is not likely to "push Google off a very big pedestal any time soon," said Caughey.

The battle for online search ads is only one front on a sprawling war for revenue between Microsoft and Google, which also encompasses operating systems and mobile phones. But neither has yet managed to compete on equal terms in each other's core market.

"In terms of our modeling, we really don't see any impact from Microsoft-Yahoo on our Google numbers," said Clayton Moran, an analyst at The Benchmark Co.

"It doesn't change much in terms of the competitive dynamics of the industry right away," he warned. "From a Google perspective, looking out over the next couple of years, it's a nonevent."

The deal, cleared unconditionally by the Department of Justice and the European Commission on Thursday, is not expected to impact Microsoft's bottom line, but could lay the foundation of a profitable online business.

"Really now, the goal is about share gain. If we grow share, we will grow our way into profitability, and we have confidence we can do that," said Microsoft's Yusuf Mehdi, who is charged with making Bing and the MSN portal a financial success, in an interview with Reuters earlier this month.

Microsoft shares rose 1.2 percent and Yahoo's rose 0.7 percent on Nasdaq, in a broadly higher tech market.

The Justice Department's Antitrust Division said the deal was unlikely to substantially lessen competition.

US market participants had expressed support for the partnership as a way to create a more viable alternative to Google, the division said in a statement issued late Thursday.

Google, which did not oppose the partnership, did not comment specifically on the regulatory approval but said that there has always been "robust" competition in the search ad business. Its shares rose 1.1 percent.

HOW IT WORKS

The deal means Bing becomes the search engine for Microsoft and Yahoo sites, while Yahoo focuses on attracting big advertisers.

Microsoft will handle the automated auction of search ads for use on both companies' sites, and pay Yahoo a portion of search ad sales generated on Yahoo pages.

Microsoft is hoping that by making itself a single conduit for advertisers to access customers on both sites, it will become a credible alternative to Google.

Last month Yahoo handled 17 percent of US Internet searches, while Microsoft took 11.3 percent, according to comScore. Theoretically, that would now give Microsoft over 28 percent of search traffic, against Google's 65.4 percent.

"At 30 points we are now a credible option, so that number matters," said Mehdi earlier this month.

Globally, Google is even more dominant, with 90 percent of the search market compared with 7.4 percent for a combined Yahoo and Bing, according to November data from Web research firm StatCounter.

FULLY COMPLETE EARLY 2012

The Microsoft-Yahoo deal was broadly expected to gain approval, but some had thought the companies might have to alter the deal's terms.

The partnership took months to hammer out last year. It followed Microsoft's aborted $47.5 billion Yahoo takeover attempt the year before. Google abandoned its own advertising deal with Yahoo in 2008, which Microsoft opposed, under pressure from the US Justice Department.

Approval means Microsoft can begin the task of putting its Bing search engine into Yahoo sites. Neither company has laid out exactly how Yahoo's new search pages will look, but they will essentially be Bing searches with some customization of results by Yahoo.

The companies aim to get the partnership fully operational in the United States by the end of this year, with the transition of advertisers taking place before the holiday shopping season, if possible. The partnership should be globally complete by early 2012.

The deal had already been cleared by regulators in Australia, Brazil and Canada, but needed US and European approval to take effect. The companies said they are still working with regulators in Korea, Taiwan and Japan.

Yahoo, Microsoft to begin their Web ad partnership
February 23, 2010
SOURCE: ET AGENCIES

WASHINGTON: Microsoft Corp and Yahoo Inc have received clearance from regulators in Washington and Europe to proceed with a search partnership intended to challenge Google Inc.

The companies announced on Thursday that the partnership has been approved without restrictions by the Justice Department and the European Commission. Under the 10-year agreement, Microsoft's Bing search engine will process search requests and steer search-related ads on Yahoo. Yahoo is due to get 88 per cent of the revenue generated from the ads placed alongside the search results on its sites.

The companies said they will begin implementing the deal in the coming days by shifting Yahoo's search platforms to Microsoft. They hope to move most advertisers and publishers before the 2010 holiday season, but may wait until 2011 if necessary, and expect to complete the process by early 2012.

This deal came about after the Justice Department indicated in 2008 that it would fight Yahoo's plan to team up with Google on search. That rejection led Yahoo to turn to Microsoft, which had once offered to buy Yahoo in its entirety.

"The European Commission has approved ... the proposed acquisition of the internet search and search advertising businesses of Yahoo! Inc. by Microsoft," a statement said.

Following tests with search users, advertisers, online publishers and distributors of search technology, the commission said market players "expect (the deal) to increase competition in internet search and search advertising by allowing Microsoft to become a stronger competitor to Google."

Yahoo! and Microsoft announced in December that they had finalised the details of an Internet search and advertising partnership -- a year after Microsoft offered 47.5 billion dollars in a takeover bid for Yahoo!.

Analysts are divided on how much closer the tie-up will take either company to powerhouse Google, the overwhelming leader in a web search and advertising market which the research firm Forrester estimates will be worth more than 30 billion dollars (22 billion euros) in 2014 in the United States alone.

A statement from the European Commission said the Yahoo-Microsoft partnership ``would not significantly impede effective competition.''

Google currently enjoys more than 90 per cent market share in Europe, the commission noted.