Google Settles With Overture/Yahoo for Over $300 million

[WiredGuy]

Just reading the newswires and noticed that Google and Overture have finally settled their patent infringement case, with Google paying over $300 million dollars to Google in stock pending their upcoming IPO. Is it just me, or do you find this completely BS? Since the patent suit was brought up I always believed that Google was not in violation of the patent, in fact, it was Overture who started to adopt a very similiar business model to that of Google by enforcing minimum CTR's.

In my opinion, this was a move done to ease over shareholders before their IPO, I am sure Google could have won this in court.


Either way, here's the article:

SAN FRANCISCO (AP) -- Online search engine leader Google will surrender more than $300 million of its stock to Yahoo in a settlement that removes a legal threat hanging over its IPO at the expense of enriching a nettlesome rival.

The agreement announced Monday gives Yahoo an additional 2.7 million shares of Google stock in exchange for dropping a patent lawsuit involving a crucial piece of online advertising technology.

The payment also resolves a dispute over how much Yahoo is owed under an old partnership between the two companies.

The settlement is worth about $328 million, based on the midpoint in the $108- to $135-per share range that Google has established for its highly anticipated initial public offering.

"I think most people are going to be surprised by the size of this settlement," predicted ThinkEquity Partners analyst John Tinker. "You usually don't want to be doing this sort of thing a few days before you price an IPO."

Google is pleased with the terms of the settlement, spokesman David Krane said Monday.

American Technology Research analyst Mark Mahaney described the settlement as "a minor positive for Google because it removes a risk."

Accounting for the settlement will saddle Google with a loss for the current quarter ending in September. The company warned it will absorb a charge of $260 million to $290 million, but didn't quantify the magnitude of the projected loss. Google earned $20.4 million during last year's third quarter.

The projected third-quarter loss represents the latest hiccup in Google's IPO. The company also has been dealing with a backlash against the high IPO price, confusion about an unusual auction being used to distribute the shares and questions about possible securities violations that occurred with the way it doled out its stock in the past.

Google still expects to complete the IPO later this month, according to documents filed Monday. The company still hasn't set a specific date. Google hopes to raise $1.67 billion from the IPO.

Monday's settlement will result in more IPO shares becoming available. That's because Yahoo - already a major Google stockholder - plans to sell 1.06 million more shares in the IPO than it intended two weeks ago.

The increase means a total of 25.7 million shares will be available in the IPO - a pool that will raise $3.1 billion, including the amount that will go into the company's bank account. Another $1.4 billion will go to insiders offering insiders and other shareholders selling a total of 11.6 million shares.

Google picked up some support for its targeted IPO price Monday from Standard & Poor's Internet analyst Scott Kessler, who released a research report estimating the company's fair market value at $121 to $127 per share. Kessler, though, emphasized Google faces substantial risks, including intensifying competition from Microsoft Corp. and Yahoo.

A successful Google IPO will have the perverse effect of providing Yahoo with more money to challenge Google's search engine leadership.

Even before Monday's settlement, Yahoo owned 5.5 million shares of Google stock - a stake acquired through a $10 million investment made in June 2000 when Google was little more than a goofy startup.

Four years later, Yahoo and Google are fierce rivals but share a financial kinship through Google's stock.

Bolstered by Monday's settlement, Yahoo has decided to sell 1.61 million shares of its Google stock in the IPO. That means Yahoo figures to raise at least $150 million from Google's IPO. Yahoo will still own 6.6 million shares after the IPO.

Yahoo's shares fell 32 cents Monday to close at $25.70 on the Nasdaq Stock Market.

[fr8]

Yes but it breaks down to it being about money.

[MasterBlogger]

Risk management learned right here on GFY.
Doesn't really matter if you're right or wrong - just the cost of defending your position.

Have you reported to Acacia yet?

[FlyingIguana]

companies typically settle lawsuits before the big ipo, i'm surprised it took this long for them to settle. unknowns are bad for a stock going public.

[Cash]

It sounds like BS to me as well, but Google couldn't afford unknowns before their IPO, so it was a smart move from Overture.

[rowan]

Originally posted by MasterBlogger
Risk management learned right here on GFY.
Doesn't really matter if you're right or wrong - just the cost of defending your position.

Have you reported to Acacia yet?

Wow. I think this is the most intelligent post I've ever seen from you. No ranting, and not one mention of vaginal orgasm being a lie!

[gornyhuy]

Originally posted by rowan
Wow. I think this is the most intelligent post I've ever seen from you. No ranting, and not one mention of vaginal orgasm being a lie!

At least ONE of his personalities has to have the semblance of normalcy so he can lure his victims.

[WiredGuy]

Originally posted by Cash
It sounds like BS to me as well, but Google couldn't afford unknowns before their IPO, so it was a smart move from Overture.

$300 million to settle a patent suit? I wish they would of fought it still.

WG

[Gunni]

well, I'm doing a lot better on yahoo than google, so best of luck to them

[pxxx]

oh shit, i didnt know that.

[Doctor Dre]

Hrmm ... well sometimes it's not about who used what first . It's about who patented it first

[Head]

Hey bud,
What's your icq?

[Basic_man]

That's big news.. checking iot

[mardigras]

Value of Offering: $2.78 bil. to $3.47 bil.
Net Proceeds to Company: Approx. $1.66 billion

300 million to get a pest out of the way before IPO: Priceless

[Nysus]

$300 million isn't really that much considering the size of those companies supposedly infringing.

I'm sure it was a PR stunt on Google's part by getting in the news before the IPO.

Matt

[Head]

Originally posted by Gunni
well, I'm doing a lot better on yahoo than google, so best of luck to them

It's the same as Acacia. Some of our friends are giving them tens of thousands o dollars.
Retarded if you ask me.

[Odie]

thanks for that wg!! it's always refreshing to have a good read on gfy for a change

[CanRX]

Now if only they hadn't issued shares illegally this thing would be going smoothly.