Google AdWords and Yahoo announced a partnership

Just hours after the official bust up with Microsoft, Yahoo announced a partnership with Google where Yahoo will host Google’s successful Google Ad share program within it’s own search and website. The companies recently ran a series of successful tests ensuring technological compatibility. Yahoo, in a statement released today, predicts a windfall of $800 million in additional ad revenues boosting cash flows to $450 million within 12 months. Yahoo and Google ads would be pitted against each other in an auction style allowing advertisers to select the provider they want.

The deal still faces some significant hurdles. Obviously, there is the matter of the growing antitrust opposition, so though the two companies may have come to an agreement, it still needs to pass muster with Herb Kohl (Wis-D) the Chairman of the Antitrust Subcommittee. Yahoo, also still need to resolve the myriad of lawsuits filed by angry shareholder’s and there is still the small matter of a proxy fight instigated by Carl Icahn to deal with, so we’ll have to see how long the honeymoon lasts as this is by no means over.

For now anyway, it seems Microsoft will try and cozy up with someone elsewhere to try and capitalize from online ad revenues. Former internet giant AOL maybe be the lucky one, or not depending on which way you look at it, to catch the bouquet, either way this should be a far cheaper alternative for Mr. Ballmer.

Google finished the day strongly on Wall Street with a nice $7.75 gain, closing up at $552.95. Microsoft also closed up $1.12 at $28.24. The biggest losers in the trifecta today being Jerry Yang’s Yahoo and Carl Icahn as Yahoo shares plunged 10.1 percent to close at $23.52.