Web search engine provider Yahoo is expanding its existing relationship with credit card vendor Visa International in order to beef up both companies' presence in the electronic commerce marketplace. The two companies will collaborate on a number of e-commerce projects, including two co-branding efforts. Visa thus becomes a key marketing and technology partner for Yahoo.
The first co-branding initiative centers on the Visa Shopping Guide by Yahoo, aimed at consumers and containing information on Web merchants and their products. While Yahoo will be responsible for the development and production of the Internet shopping guide, Visa will contribute personal finance planning guides to the project.
The second planned co-branding exercise involves Yahoo and an as yet unnamed financial institution unveiling a Yahoo Visa card targeted at Internet users. The companies did not commit to start dates for either of these two projects.
In addition, Yahoo and Visa will promote and endorse each other's product offerings. Yahoo will designate Visa as its "preferred card," while Visa repays the compliment by touting Yahoo to financial institutions and their customers as its preferred Internet guide.
Both companies also pledged to further promote the recently announced SET (Secure Electronic Transaction) 1.0 set of standards designed to improve the security of commerce over the Internet.
As of June, Yahoo claimed average daily traffic of 38 million page views and more than 100,000 merchant listings on its Web site. For its part, Visa claims to have currently close to 600 million credit cards in worldwide circulation, along with 21,000 member financial institutions.
On the financial side, Visa plans to give up its 45% ownership in Yahoo Marketplace LLC, which Yahoo and Visa jointly founded, while Yahoo has issued more than 466,000 shares of its common stock to the Visa Group, the companies said.
Yahoo announced that it has incurred a one-time, noncash, pretax charge of US$21.2 million associated with the change in ownership of Yahoo Marketplace. The company restated its second-quarter financial results for the period ending June 30 to reflect the charge.
With the charge in place, Yahoo's previously profitable second quarter - with net income reported on July 9 of $610,000 or 2 cents per share - turns into a money-loser, with a net loss of $20.5 million, or 74 cents a share.
The Web search engine provider also announced yesterday a three-for-two stock split. The split, approved by the company's board of directors, means that Yahoo shareholders of record on Aug. 11 will receive one extra share for every two shares they hold at that time. The additional shares will be mailed out to shareholders on Aug. 29.
Officials of both Yahoo and Visa were not available for comment.
Yahoo, with headquarters in Santa Clara, California, can be reached on the World Wide Web at http://www.yahoo.com/. Visa International, based in San Francisco, can be reached via the Internet at http://www.visa.com/.