Yahoo’s Google Test Positive; Moving Closer To An Alternative?

Yahoo’s (NSDQ: YHOO) two week test of using Google’s (NSDQ: GOOG) search ad technology is bearing positive results a week into it, thus possibly giving the belabored Internet giant some leverage in its negotiations with Microsoft (NSDQ: MSFT), reports WSJ, citing sources. Of course, it is still a game of brinkmanship for Yahoo: Microsoft could raise its $31 a share offer, and force the hand of the board and investors.

If this alternative stands, and then AOL (NYSE: TWX) possibly merges with Yahoo, as the ongoing talks between the two signify, then the bigger issue would be anti-trust approval of the Google-Yahoo arrangement, however limited. Some ways to structure GOOG-YHOO search ad deal would include limiting the partnership to specific groups of search queries or regions, for example, the story says.

For now, things are in bit of standstill. A break could come with Yahoo’s Q108 earnings on April 22. If the company reports stronger-than-expected results, that would bolster Yahoo arguement that it should be valued at more $31 a share…the opposite would be true with weaker results.