Yahoo buys search firm Inktomi for $235M
IDG News Service - Yahoo Inc. has purchased Inktomi Corp. for about $235 million, the companies announced today. Yahoo will add Inktomi's Web search technology to its portal sites in hopes of becoming the premier destination for Web searches, it said.
Inktomi's technology is used by a number of businesses to allow searches of their sites and the Web. Yahoo will use the technology for both purposes, said Jeff Weiner, senior vice president of search and marketplace at Yahoo.
"Our objective is to provide the highest quality search experience and to be the leading provider of search [technology] on the Internet," he said.
Foster City, Calif.-based Inktomi has deals with Amazon.com Inc., eBay Inc. and Microsoft Corp.'s MSN.com portal, according to its Web site. Computerworld.com also uses Inktomi search software.
Yahoo currently uses technology from Google Inc. as the back end of its search engine. Google's technology isn't going away, but Yahoo feels that it can provide a better searching experience to its users if the company uses in-house engineers and assets instead of licensing technology from another company, Weiner said.
Robert Lancaster, an analyst at The Yankee Group in Boston, said it's unclear how the acquisition of Inktomi, one of Google's main search-engine rivals, will affect Yahoo's relationship with Google.
"It further pits Yahoo against Google," he said. "Both of their revenues are directly generated by traffic. They needed each other."
As Google has built in further functions, the company has been going after Yahoo by competing with more services, he said. "They're taking eyeballs away from Yahoo," he said.
For example, Google now sports a popular automated news page, making the site more of a destination and not simply a search engine. Yahoo also promotes news as one of the attractions on its site.
Inktomi's search technology was included in the recent launch of Yahoo competitor Terra Lycos SA's new HotBot search site. Yahoo is committed to Inktomi's affiliate agreements, Weiner said.
Yahoo's prospects are looking better after doubts about its sustainability emerged during the dot-com crash and advertising slump of the past year. The Sunnyvale, Calif.-based company's third-quarter results were better than expected, and a recent report suggested that the online advertising market is showing signs of rebirth (see story).
Inktomi's paid-inclusion technology will add to Yahoo's revenue. Inktomi's program places paid advertisers in a pool, then ranks the pool members by relevance to a user's search terms, as opposed to Yahoo's current pay-for-placement service run by Overture Services Inc., which ranks search results according to who paid the most, Weiner said.
Like Google's technology, Overture's services will remain part of the newInktomi/Yahoo search page, Weiner said.
Yahoo's stock was up 41 cents, or 2.39%, to $17.49 in midafternoon trading today. Inktomi's stock was up 44 cents, or 37.6%, to $1.61 on news of the deal. The deal reflects a purchase price of $1.65 per share for Inktomi, Yahoo said.
Inktomi has approximately 140 employees remaining after the sale of its enterprise search business to Verity Inc. in November. It's too early to know exactly how current Inktomi employees will be affected by the deal, Weiner said.
Computerworld reporter Todd R. Weiss contributed to this report.
- 15 Non-Certified IT Skills Growing in Demand
- How 19 Tech Titans Target Healthcare
- Twitter Suffering From Growing Pains (and Facebook Comparisons)
- Agile Comes to Data Integration
- Slideshow: 7 security mistakes people make with their mobile device
- iOS vs. Android: Which is more secure?
- 11 sure signs you've been hacked
- What Datapipe customers need to know about the new PCI DSS 3.0 compliance standard This handy quick reference outlines what PCI DSS 3.0 is, who needs to be compliant and how Alert Logic solutions address the new...
- Defense Throughout the Vulnerability Life Cycle This whitepaper provides insight into how to leverage threat and log management technologies to protect your IT assets throughout their vulnerability life cycle.
- The Critical Role of Support in Your Enterprise Mobility Management Strategy Most business leaders underestimate the importance of tech support when they choose an EMM solution. Here's what to put on your checklist.
- Separating Work and Personal at the Platform Level: How BlackBerry Balance Works BlackBerry® Balance™ separates work from personal on the same mobile device, right at a platform level. Find out how it can work for...
- Live Webcast Best Practices for the Hyperconverged Enterprise Network To the Age of Constant Connectivity and Information overload
- Getting Ready for BlackBerry Enterprise Service 10.2 Find out how BlackBerry® Enterprise Service 10 helps organizations address the full spectrum of EMM challenges, while balancing the needs of both the...
- Containerization Options: How to Choose the Best DLP Solution for Your Organization This webcast outlines a framework for making the right choice when it comes to containerization approaches, along with the pros and cons of... All Networking White Papers | Webcasts