Yahoo yesterday extended the spate of acquisitions that has helped to breathe life back into the battered internet sector, contributing to a further rally in technology stocks on Wall Street.
The internet portal company agreed to lay out $1.63 billion (€1.44 billion), more than $300 million of it in cash, to buy Overture Services, which pioneered what has become the fastest-growing part of the online advertising business.
The deal continues the series of acquisitions that has seen the dotcom sector restructure, resulting in new internet "blue-chips". While Yahoo has bought internet search, online advertising and job listings services, InterActiveCorp has mopped up online commerce companies.
The stock price revival for Intel, the world's biggest chipmaker, which has seen its shares rise 87 per cent from their low point in the past 12 months, pointed to hopes that the most deeply cyclical parts of the tech sector could be about to rebound.
Yahoo's purchase of Overture positions it for a head-on fight with Google for dominance in the internet advertising business.
After three years of declines, online advertising is projected to grow again this year, thanks in large part to the so-called "sponsored search" service devised by Overture. The company sells businesses the right to advertise on the pages that return search results on sites such as Yahoo, linking advertising directly to the subject of the searches.
Already a big market in the US, sponsored search has started to arrive in Japan, South Korea and some leading European markets, creating a race between the established US firms and local newcomers for the early lead.
With Overture, Yahoo can "extend our services internationally to create a global marketplace", said Mr Terry Semel, the former Hollywood studio chief who has overseen Yahoo's revival.
Yahoo rose to prominence on the first wave of internet advertising, only to see its revenues collapse with the breakdown of the dotcoms that provided the ads. Its return to growth reflects a new wave of online advertising from more established businesses, as well as small companies that use services such as Overture to reach highly targeted internet audiences.
Yahoo said it had agreed to pay 0.6108 of a share of its stock and $4.75 in cash for each Overture share. - (Financial Times Service)
