Yahoo to buy search-software maker Inktomi | SCMP

Internet media company Yahoo on Monday said it would pay US$235 million to buy Internet search-software maker Inktomi, strengthening its position in the growing Web search business.

By acquiring Inktomi and its paid-search capabilities, which generates advertising income, Yahoo also lessened its reliance on Google, a privately held company that currently provided search functions to Yahoo but had also positioned itself as an up-and-coming competitor, analysts said.

The acquisition also pushed other technology stocks higher, as it generated hope among investors for further consolidation in software and other industries that have seen revenues shrink in the wake of the collapse of the Internet bubble.

The acquisition of money-losing Inktomi comes amid increased competition from popular search engine Google, which recently launched an online shopping site and a news Web site.

"Search has become a very profitable, high-growth industry, and this is going to give them more control over their search product," Pacific Crest Securities analyst Steve Weinstein said. more