The deal for Yahoo! (NASDAQ: YHOO) to allow Google (NASDAQ: GOOG) to sell text ads on the portal's search pages may happen more quickly than most analysts believed. According to The Wall Street Journal, "Yahoo Inc. moved closer to outsourcing its search advertising to Google Inc. after an initial test of the system yielded what the two firms deemed positive results."

The partnership could add several hundred million dollars of revenue to Yahoo!'s annual numbers. Most observers believe that regulators would be troubled by the two largest search companies joining forces.

The news still begs that question of whether any deal can be better than Microsoft's (NASDAQ: MSFT) offer to buy Yahoo! for over $29 a share. The first offer was at $31, but Microsoft's shares, part of the payment, have declined since then.

Yahoo!'s actions to run away from Microsoft seem to go along the lines of trying to stay independent for the sake of being independent. In other words, the company has no answer to the question of why investors are better off if Yahoo! stands alone.

Since no one other than Microsoft wants to buy the portal, the answer is that Yahoo! has lost all options to defend its present strategy. A deal with Google does not, in any way Yahoo! can explain, make the company worth $30 a share.

Douglas A. McIntyre is an editor at 247wallst.com.

Hat-tip to PaidContent.org, a good site about the media business, which reported on Friday about Jupitermedia (NASDAQ: JUPM) purchasing Flying Hands Music, an online library of royalty-free music. Jupitermedia CEO Alan Meckler posted on his blog that this "was part of the company's strategy to expand, what it believes, is the world's largest collection of royalty-free music."

JUPM will be combining Flying Hands with its existing site, RoyaltyFreeMusic.com. It appears Jupiter has larger plans to bulk up its music offering. As announced on Meckler's blog, JUPM has plans to launch a new way for organizations to buy royalty-free background music for websites and other purposes in late February.

It's a good thing Jupiter is looking for expansion. Its stock is down 50% for 2007 and its larger competitor, Getty Images (NYSE: GYI) is down over 30%. Both companies have been plagued by what Citibank analyst Matthew Troy called "investor concern about structural shifts in the stock imaging landscape, driven by rapid growth in alternative channels and forms of lower yielding image licensing" in a research piece in November.

In other words, what was once a lucrative business is being eaten away by smaller sites with aggressive pricing and licensing requirements that just aren't what Jupitermedia was accustomed to seeing. To address this issue, JUPM has changed its focus to expand into media with acquisitions like Flying Hands.

What investors who have followed the story for some time are witnessing is that the Jupitermedia investment thesis has changed. Instead of Jupiter spinning off some of these web properties, Jupitermedia is now actually looking to acquire new businesses to amalgamate to their media business.

Zack Miller is the Managing Editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund. Author holds no position in stocks mentioned.

Amazon.com (NASDAQ: AMZN) shares are surging today ahead of this evening's Q3 earnings report. We have recently seen some positive earnings reports from Apple (NASDAQ: AAPL) and AT&T (NYSE: T) that are getting investors excited for Amazon's numbers. Wall Street analysts expect earnings of 18 cents per share tonight from AMZN. The company earned 19 cents per share in the previous quarter, and five cents per share in the year-ago quarter. AMZN has beaten EPS estimates each of the last four quarters. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on AMZN.

Shares have been rising steadily over the past six months, hitting a 52-week high of $96.73 earlier this month. AMZN opened this morning at $95.28. So far today, the stock has hit a low of $94.21 and a high of $95.44. As of 11:45, AMZN is trading at $94.83, up $3.54 (3.88%). The chart for AMZN looks bullish but deteriorating slightly, while S&P gives the stock a negative 2 STARS (out of 5) sell rating.

For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $60 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 5.3% return in just 3 months as long as AMZN is above $60 at January expiration. Amazon would have to fall by more than 36% before we would start to lose money.

AMZN hasn't been below $60 since April, and has shown support around $90 recently. This trade could be risky if this evening's earnings disappoint, but even if that happens, this position could be protected by recent support between $65 and $75, plus the stock's 200-day moving average, which is currently at $62 and rising.

Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: At publication time, Brent neither owns nor controls positions in AMZN.

Visit AOL Money & Finance for more earnings coverage

When Sequoia Capital does a venture deal, people listen. The firm has backed such companies as Cisco (NASDAQ: CSCO), Apple (NASDAQ: AAPL), Google (NASDAQ: GOOG) and YouTube.

Well, Sequoia is making another play in the video space; that is, it has arranged a $4 million investment in TokBox.

With TokBox, you can make video calls – for free. Also, the platform is completely web-based. You don't even have to register for the service. There is also a cool feature that allows you to embed TokBox on a blog or social network.

I had a chance to interview Chase Norlin on the matter (he is the CEO and founder of Pixsy, which is a video search engine). According to him:

"Tokbox is in a very interesting space that has yet to produce a clear winner. The pioneer and current leader of the space is Paltalk, the main difference being that they're a downloadable app. The recent funding of TokBok brings back a lot of memories of eBay (NASDAQ: EBAY)'s Skype in the early days: Find a breakthrough technology, get mass distribution, then figure out how to monetize it later. Hopefully these guys will figure out that last part quicker than Skype has."

If you want to check out other venture fundings, click here.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements.

Google (NASDAQ: GOOG) has confirmed it will end a 19-month experiment that looked doomed from the start. According to the Wall Street Journal, Google Video, the service that sold and rented the right to watch a wide range of videos for anywhere from a couple of dollars to $20, will stop showing paid programming on Wednesday. The service was expected to underscore Google's intention to create a revenue-based online video forum, a la YouTube, which Google owns. It obviously didn't work.

Donna Bogatin of InsiderChatter.com called Google Video a "YouTube wannabe" and jokingly questioned Google's recent decision to pull the plug on a service where many of their pay-to-see videos were actually YouTube videos on a Google viewer.

To compensate customers who will no longer be able to use the videos they purchased, Google is providing a refund in the form of credits that can be used in conjunction with its online payment service, Google Checkout. Check out the email they sent to users on Cnet news.com. Google declined to reveal exactly how many people purchased videos through Google Video or the total refund amount to its customers, but a spokesman said it would not materially impact the company. With YouTube and hundreds of other websites that provide free clips on the internet, it's clear that Google didn't have to cough up a lot of refund credits to the viewing public.

Every time you look at your children and wish they would grow up and stop being so immature, remember that the two are not synonomous. Case in point -- eBay Inc (NASDAQ: EBAY). The market-leading auction website left Google Inc's (NASDAQ: GOOG) AdWords advertising system because it was miffed that Google planned a party the same day as eBay's annual user celebration in Boston.

Well after crying at its party, eBay came crawling back, apparently realizing that although it has other options -- Yahoo Inc (NASDAQ: YHOO), IAC/InterActiveCorp's (NASDAQ: IACI) Ask.com, and Microsoft Corporation's (NASDAQ: MSFT) MSN.com -- none are nearly as good as AdWords. EBay's inability to stay away serves as an example of Google's strength in the Internet advertising market.

Of course, this is not what eBay is claiming. EBay spokesman Hani Durzy said, "Overall the takeaway for us was that we weren't as dependent on AdWords as some out there may have thought... Other partners -- Yahoo and AOL and MSN -- really stepped up and provided a lot of value. And natural search continues to drive a lot of valuable traffic to the site."

Empty words, since the actions don't coincide.

The on-line travel business is coming out of its first major downturn. Who is positioned to benefit most from the current upswing? Expedia Inc (NASDAQ: EXPE) is being mentioned more frequently. So much so that the on-line travel giant announced a $3.5 billion share repurchase this morning.

Thomas Weisel believes Expedia is in the early stages of a potentially material turnaround, regardless of any LBO or buyback and has placed a $37/share price target, in a report published yesterday. Expedia's stock rallied late last week on news that it might be taken private. Barry Diller, the on-line travel giant's CEO, owns 58% of the voting stock.

Much of the on-line travel business has gone through considerable consolidation as financial buyers bought up Travelport (Cendant's on-line travel business) and Sabre Holdings, which owns Travelocity, was acquired by Silver Lake and Texas Pacific Group. The change in ownership helped add pricing discipline to the market.

Expedia has invested close to $1 billion in developing software to improve services and develop new products. So much for believing the Internet has low barriers to entry. Who is going to be able to replicate a decade of code writing to surpass the purest Internet travel play. The answer is no one.

Expedia changed management a year ago and is beginning to see the fruits of new strategies. In addition, Expedia appears to benefit from economic slowdowns as its on-line reservation platform is a great vehicle to reduce excess hotel room inventory. Stock upgrades, LBO speculation and improved operating performance all bode well for Expedia shareholders.

Early in May, Apple Inc. (NASDAQ: AAPL) and EMI Group PLC (OTC: EMIPY) announced that Paul McCartney's catalog would be released digitally for the first time before the end of the month. A week ago, another announcement was made that the material was to be released this week on iTunes. As of this writing, no such release has occurred on iTunes, but according to PC World, the tracks are all available on Napster (NASDAQ: NAPS), RealNetworks Inc. (NASDAQ: RNWK)'s Rhapsody, Viacom International Inc. (NYSE: VIA)'s Urge, and Microsoft Corp. (NASDAQ: MSFT)'s Zune Marketplace.

On iTunes (and I checked), the only available McCartney albums are the pre-order for his new Starbucks Corp. (NASDAQ: SBUX) flavored album and his 2005 Grammy nominated Chaos and Creation in the Backyard. Furthermore, comparing the price of individual tracks on iTunes, $0.99, with those available for purchase (not the subscription service) on Rhapsody, $0.89, I am wondering if all of Apple's pronouncements about EMI and The Beatles are falling apart. iTunes is not the only store that is privy to the new EMI tracks (without Digital Rights Management technology), but clearly it is now the only store without a significant EMI catalog. It is also the catalog that is supposed to lead into The Beatles' catalog being released. Whether that happens on iTunes seems cloudy at this point, but other digital services will likely stay ahead of Apple's service in this game.

Apple's stock has been growing for a while now, closing at $110.69 yesterday and already well above $112 today, and any lack of Beatles-related material on iTunes won't dampen that progress.

As a warning, I'm one of the .0354% of Americans who have never ordered anything at Starbucks Corporation (NASDAQ: SBUX). Maybe it's the fact that I find the whole idea of a chain of "neighborhood coffee shops" with jazz music and local art a little tacky. Perhaps it's the personal finance writer and penny-pincher in me that doesn't want to spend that amount of money for a cup of coffee. So be warned: I've met people to talk in Starbucks several times but I've never actually bought anything there. When I write about Starbucks, I do so from the perspective of a skeptical non-customer rather than that of a latte-sipping fan.

Starbucks currently charges $6 an hour for in-store access to the Internet through AT&T's T-mobile service, compared to McDonald's which charges $2.95, and Panera, which will let you go on for free. This raises a question: Is Starbucks making itself less competitive by charging for the Internet, or is Panera stupid to give away a service people would gladly pay for (as evidenced by the large crowds at Starbucks)? From a business perspective I think makes sense to charge, if only to keep tables from being taken up by people who buy one cup of coffee and then freeload on the Internet access for two hours (or am I the only person who would actually do that?).

Do you mind paying for Internet access in restaurants? Would you be more likely to frequent a cafe that lets you on for free?

This post is in response to a question from one of my loyal readers. Loyal enough to ask me a question, that is! It's so nice to know that there's someone reading my stuff besides me.

Her question is simply; What's eBay Inc.'s (NASDAQ:EBAY) plan C? She asked this in response to eBay's decision to change its China game plan from one of open competition to one of minority partner in a shared venture. I'm not sure what her vested interest in eBay is, but her question is valid nonetheless. Here's the problem -- I'm not sure eBay has a "plan C" nor am I certain whether or not it thinks it needs one. As of this writing, eBay auction stats are pretty much in keeping with the previous two years, although its after Christmas listing count bounce-back is progressing slower than '04 and '05. It will be a couple weeks before we can get a good picture as to the true condition of listing volume going into 2007.

I knew Nielsen didn't formally track the viewership of TV commercials as part of its television ratings, but somehow, I didn't know it. It seems like an obvious win -- after all, ever since the days when VCRs reared their 12:00-blinking heads in the world's living rooms (and don't even get them started on TiVo), broadcasters have been wondering whether people were watching commercials.

Well here you are, Nielsen: I watch TV ads, and so do my children, so they can nag me. But you'll know that soon, as you're about to start formally breaking out commercial breaks in the TV numbers you report. Everyone's expecting, of course, to see that viewership declines sharply during advertisements. And the natural evolution of the negotiation strategy: advertisers will start asking to pay less for their 30 seconds' worth of that reduced number of eyeballs. Money will flow away from the TV breaks and toward that other, far more measurable medium: the internet.

Or will it? So many advertisers have already made their mark by liberally sprinkling their products throughout the plots of your favorite shows. Take Kyle XY, the ABC Family show I've become addicted to. Kyle and his "brother" use Sour Patch Kids as currency. Watched the Hallmark Channel original movies recently? Boy have I never seen such loving treatment of an automobile. The camera loves the minivan ...

And isn't the "get up at the commercial and get a snack" contingent already calculated into the equation when advertisers decide how much they'll pay?

I just got off eBay's first quarter earnings call and no longer am I quite so surprised that the stock sold off in after-hours trading after the auction giant released its results. The stock fell 5% to $38.42 after today's 5 p.m. ET announcement. 

On the face of it, the results weren't bad. EBay met Wall Street's estimates and exceeded its own guidance -- although it did some weird monkeying around with "non-GAAP" results that used to be known as "pro-forma" and would have been higher if it weren't for stock option expensing and new accounting rules. (Just give us the straight scoop, next time, okay?).

The release's second subhead was a real grabber: "Q1 GAAP Diluted EPS of $0.17 and Non-GAAP (pro forma) Diluted EPS of $0.24." Catchy, right?

But that's not why the stock sold off.