Internet Giants Meeting Middle Age Together

The news hit at a time when eBay (EBAY Quote), though a respected Internet name, had muddled through a year when its stock barely budged, even as other Web stocks surged higher.

Reports trickled out that the online auctioneer would begin a major partnership with mega-site Yahoo! (YHOO Quote) -- maybe even a merger. It was just the boost the stock needed. eBay popped 15% overnight, reaching its highest level in months.

Yes, it all happened, but not, as you might guess, last week. This eBay/Yahoo! rumor appeared on the ides of March -- more than six years ago. By the next day, when the Financial Times said that the rumors were bunk, eBay investors grew crestfallen. The stock not only gave up the 15% gain, it fell a further 11% that day.

In the end, it was Yahoo! that got the shorter end of the history stick. eBay's stock is up 44% from where it was on March 15, 2000, while Yahoo's is down 58%.

So, why bring up ancient history, a six-year-old speculative rumor of a Yahoo!/eBay tie-up?

Because now that executives at both companies have finally shaken hands and sealed a deal that could just as easily have happened long ago, it offers an interesting now-and-then perspective on both companies. And because it underscores the most interesting -- and most overlooked -- angle of this partnership.

But it's not that Yahoo!'s ads will be spread across eBay's site, the fifth most popular online destination last April with 76 million unique users.

And it's not that the partnership will beef up eBay's advertising revenue, currently less than $100 million a year, or 2% of total revenue. (Susquehanna Financial estimates the new ad money could mean as much as 25 cents a year in earnings per share.)