15 July 2003 Internet portal Yahoo is buying sponsored search service Overture in a $1.63 billion deal.
The purchase is the latest — and biggest — in a long line of deals that has seen the dot-com sector restructured following the crash of 2000.
It comes just three months after Overture completed the acquisition of Norway’s Fast Search &Transfer for $210 million. In February, Overture also picked up the once-popular search site Alta Vista for $140 million.
Overture has a partnership with Microsoft to add sponsored search facilities to its Microsoft Network (MSN) online service and it had been rumoured that the software giant might therefore be interested in buying Overture.
However, Yahoo is also dependent on Overture for about one fifth of its revenues as a result of an earlier deal. It also follows a December 2002 takeover of ailing search technology vendor Inktomi in a $235 million deal.
The market for advertising tied to online searches is currently buoyant. It tripled in size last year, at a time when the online advertising market as a whole declined by 16%.
Nevertheless, some analysts are becoming concerned at the dot-com size value that Yahoo stock is now trading at. Yahoo shares are currently changing hands at some 90 times its 2003 consensus earnings forecast, a level far in excess of trading multiples in most other sectors of the computer industry.
