Microsoft's Mehdi on financial impact of Yahoo deal

In a speech, Microsoft's Yusuf Mehdi says that once the two companies have a single paid search platform both should see double-digit increases in revenue per search.

Although Microsoft and Yahoo have only just inked their final search deal and still need regulatory approval, Microsoft's Yusuf Mehdi talked on Tuesday about the economics that the deal will bring.

Speaking at a Credit Suisse technology investor conference in Arizona, Mehdi said that both Microsoft and Yahoo should see a double-digit increase in revenue per search, once the two companies have a single paid search system.

Mehdi Microsoft

Putting their two separate paid search systems together will take longer than just setting up Yahoo to use Bing's algorithmic search.

"That is going to take some time," Mehdi said in the speech, which was Webcast on Microsoft's investor site. Just closing the deal has taken quite awhile. There was the months of talks of an outright acquisition, then the eventual search deal announced in July, and then several more months spent ironing out the final details.

Now Microsoft is waiting on regulatory approval on the deal, but Mehdi said he remains optimistic that it will get the nods it needs in time to close the deal early next calendar year.

The integration is also going to be expensive Mehdi acknowledged, reiterating a past estimate that Microsoft will spend $100 million to $200 million in transition costs during the first year. Mehdi said the company has not said how much it expects to spend in the second year, but said that after that, the deal should be a boon to Microsoft's financial results.

As for Bing, Mehdi said executives are pleased with the results for its first six months, citing ComScore U.S. search query market share figures that show Microsoft growing from 8.4 percent to 9.9 percent over that period. That said, Mehdi acknowledged that "we have a very long ways to go against a tough competitor."

Several Microsoft executives will be in San Francisco on Wednesday to talk about some new moves in search, including some developments in mobile and mapping. Google, meanwhile, is planning a search event of its own on Monday.