Will Microsoft, Yahoo earnings overshadow search deal?

Before you go, we thought you'd like these...
Before you go close icon
The tech companies reported to be in talks to secure a search partnership deal may overshadow those talks, as both report earnings this week.

Yahoo Inc. (YHOO) reports its second-quarter earnings today, while Microsoft (MSFT) is scheduled to report on Thursday. Last week, Google (GOOG) posted its slowest sales growth since the company sold shares to the public in 2004; this week, tech investors will learn whether Yahoo and Microsoft had a similar experience in April, May and June.
For Microsoft, weak sales of personal computers this year may hurt sales of its Windows and Office software products. And Yahoo may not be able to show enough sales growth to satisfy investors eager to see what strategy CEO Carol Bartz has in mind for the once-dominant search company.

"Longer term, without a Microsoft deal, Yahoo is going to have a tough going," Youssef Squali, managing director of Jefferies & Co., told CNBC on Monday. "They'll have to try to out-Google Google." Squali said the best growth idea for Yahoo is "going back to media, and becoming the largest display advertiser."

Possibly eyeing that strategy, Yahoo today unveiled a homepage redesign in a cleaner, simpler visual format that the company hopes will boost ad revenue. "This is probably the most fundamental revisiting of the Yahoo home page since the beginning of Yahoo," Tapran Bhat, Yahoo's senior v.p. of integrated consumer experiences, told Bloomberg News.

Yahoo could have a heck of a week if it can pull off the one-two(-three) punch of recreating its Web page for the first time in three years; beating earnings expectations; and securing the search partnership with Microsoft. Yahoo investors would view Bartz as taking the company in the right direction.

If indeed a search deal is announced, it's more likely to come on Thursday, when Microsoft reports earnings, as Microsoft is the pursuer in the partnership with Yahoo. Analysts speculate that a deal between the tech giants could boost Yahoo's shares by as much as five dollars. If the share price gets a boost, analysts and investors will expect Bartz to increase ad sales after putting Yahoo back in the tech spotlight.

Anthony Massucci is a senior writer for DailyFinance. You may follow him on Twitter at hianthony.
Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners