STEVE INSKEEP, host:
Yahoo and Google are trying to make profits by teaming up on advertising. The plan is for Yahoo to run Google ads alongside its search results on some of its Web sites. We have more this morning from NPR's Wendy Kaufman.
WENDY KAUFMAN: Yahoo's desperately looking for ways to increase revenue and profit. In a conference call after the markets closed yesterday, the company said the deal with Google could produce $800 million in revenue the first year and create better growth opportunities for online ads.
Yahoo's founder and CEO Jerry Yang.
Mr. JERRY YANG (CEO, Yahoo): We've done something really important here. I believe this puts Yahoo on a faster track to creating stockholder value and leadership in an emerging world of online global advertising.
KAUFMAN: But several analysts, including Derek Brown of the Wall Street firm Cantor Fitzgerald, questioned the wisdom of the deal.
MR. DEREK BROWN (Cantor Fitzgerald): There's certainly a risk - we think a relatively high risk at that - that Yahoo is sacrificing significant long-term opportunities for near-term revenue and profit.
KAUFMAN: He and others believe that the deal could make Google - the number one online ad seller - even more dominant over the long term.
Yahoo's deal with its rival comes against the backdrop of a proxy fight at Yahoo. Activist/investor Carl Icahn is trying to oust the company's board. Separately, shareholders have filed lawsuits claiming they were hurt financially by Yahoo's failure to cut a deal with Microsoft. That deal fell apart early last month after the two sides couldn't agree on price. Yahoo had second thoughts, but by then Microsoft was no longer interested. And yesterday, that news sent Yahoo's stock down sharply.
Wendy Kaufman, NPR News.
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