Peter Kafka

Recent Posts by Peter Kafka

Addition Through Subtraction: Wall Street Gives Google a MySpace Bump

Google and MySpace have yet to announce a new search deal. But J.P. Morgan analyst Imran Khan thinks he knows what the new pact will mean to the search giant: A $200 million annual boost.

As Kara Swisher has reported, Google (GOOG) and MySpace owner News Corp. (NWS) are close to a “realistic” search deal to replace the famous three-year, $900 million pact signed during the Web 2.0 boom. The old deal expired this summer, and the two companies have been negotiating a replacement while working through a couple of one-month extensions.

News Corp., which also owns this Web site, doesn’t have much leverage here. Its once-hot social network has long been eclipsed by Facebook, and Microsoft (MSFT) doesn’t seem inclined to make a competitive bid for the MySpace business.

Translation: The new deal should save Google $200 million in traffic acquisition costs, Khan says. And he figures that those savings will show up as soon Google’s Q3 results, due out next week: He’s boosted his net revenue estimate to $5.33 billion, up from $5.32 billion.

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik