New York, Dec. 24: Moving to re-establish itself as a pre-eminent place to search the internet, Yahoo said on Monday that it would buy Inktomi, a maker of Web search technology, for $ 235 million in cash.
Searching for Web sites remains the second-most-popular online activity after e-mail. And it has proved to be a lucrative business, because advertisers have found that the best way to attract users to their sites is to place advertisements next to or even among Web search listings.
Yahoo's acquisition provides somewhat of a soft landing for Inktomi, which saw its shares hit $ 231 in March of 2000 — briefly giving it a value of about $ 25 billion — but then saw much of its expansion plans collapse, leaving it saddled with expensive real estate commitments. In two years, Inktomi has eliminated 88 per cent of its jobs and most of its business lines to return to its initial focus on providing searches for Web sites.
Yahoo is paying $ 1.65 a share for what remains of Inktomi, a 41 per cent premium over its $ 1.17 close on Friday. Inktomi now has 140 employees, and Yahoo will hire the majority of them.
Yahoo, too, lost some of its focus on Web searching as it expanded into a plethora of other areas. But it continued to dominate Web searching until the last year, when it was eclipsed by Google, a latecomer to the search business that impressed users by providing more relevant results than its rivals.
In fact, Yahoo began to use Google for some searches in 2000, helping establish and promote the company, which is now one of Yahoo's most potent rivals.