Yahoo Inc and Microsoft Corp ended months of deal talks on Thursday as the Web pioneer agreed to let archrival Google Inc sell search ads on its site, the companies said.
Separate statements from Microsoft and Yahoo signaled a real rift between the two after their agonizing on-again, off-again talks, and Yahoo shares fell 10 per cent as final hopes of a full or partial acquisition faded for many.
Microsoft shares rose more than 4 percent as investors showed relief that the company would not be paying too high a price for a deal they considered risky -- and even though it faces the joining of forces of its biggest rivals on the Web.
Yahoo said it had agreed to let Google put search ads on its site in what it called an $800 million annual revenue opportunity that would boost cash flow by $250 million to $450 million in the first 12 months.
"Google has made an enormous gain strategically. This move might well have shut Microsoft out of the online space altogether," said Sanford Bernstein analyst Jeffrey Lindsay.
