DEALTALK-Microsoft seen as Diller's best bet for Ask.com
* Bing seen by analysts as a buyer or partner for Ask
* Diller says future of search business is "speculative"
NEW YORK, Oct 28 (Reuters) - Microsoft Corp (MSFT.O) is viewed as the most likely buyer or partner for IAC/InterActiveCorp's (IACI.O) Ask.com if CEO Barry Diller decides to throw in the towel on the struggling search engine.
Diller effectively hung a "for sale" sign on Ask.com on Tuesday, when he said on a conference call with Wall Street analysts that the search business is "challenging" and its future is "speculative." [ID:nN27232046]
Answering questions about whether he would consolidate a business that has been unable to expand beyond its 4 percent market share in search queries, Diller said, "The answer is 'yes.' And it is unlikely that we would be the consolidator."
Some analysts are taking those words as a 'come and talk to me' message to Microsoft, which relaunched its search engine as Bing this year. Microsoft is seeking distribution deals with any number of partners to compete against Google Inc (GOOG.O).
In the search market, Ask.com is a distant fourth behind Google with its 64.9 percent share, Yahoo with 18.8 percent and Microsoft with 9.4 percent, according to comScore.
Most of Ask's revenue now comes from an advertising relationship with Google, which provides links of relevant advertisers in response to a user's search query on Ask.com
"Right now, Microsoft wants share so they could pick up those points from Ask," said Colin Gillis, an analyst at Brigantine Advisors. "Plus it has a double impact since Google powers Ask's paid search."
Ask.com has tried a number of different strategies in the last few years to drive users to its search service, including TV advertising, vertical marketing partnerships with the likes of NASCAR, and more user-friendly search technology.
Yet as Diller himself acknowledged on Tuesday, it has been very difficult to change users' habits.
Analysts said if Diller is to make a decision on Ask's future, then sooner is probably better than later.
The search market is going through major changes with Bing gaining market share, and a new search partnership between Microsoft and Yahoo expected to kick in next year.
Microsoft is viewed as willing to spend to bulk up its search share, but that could change if IAC doesn't move now.
"There's no place for a third player in search," said Trip Chowdhry, an analyst at Global Equities Research. "This is a market where the winner takes it all." Continued...
