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Yahoo completes GeoCities acquisition

Yahoo completes its acquisition of the community site to boost its community offerings and will lay off about 200 GeoCities employees.

Yahoo today completed its acquisition of community site GeoCities, which will boost the portal's community offerings but will require Yahoo to take a one-time charge of roughly $68 million in its second fiscal quarter.

As reported, many of GeoCities' roughly 300 employees will be laid off. Some said they have voluntarily chosen not to pursue employment at Yahoo. Yahoo said about 100 people from GeoCities' staff will join the new entity, including management and other employees.

With the acquisition, announced in January, Yahoo is looking to shore up its community offerings. Yahoo said it plans to integrate GeoCities' personal publishing tools and "neighborhoods" within its community services in the coming weeks.

Under the deal, See related Newsmaker: 
Jeff Mallett which is being accounted for as a pooling of interests, Yahoo will issue 0.68 shares for each share of GeoCities, or about $90.27 per share, according to yesterday's closing price, Bloomberg reported. Yahoo also said it will convert about 8.6 million GeoCities stock options into about 5.82 million Yahoo stock options.

Yahoo will take a $68 million charge against second-quarter earnings for its $2.87 billion acquisition of GeoCities, Bloomberg said.

Among the changes in management, GeoCities chief executive Tom Evans is now senior vice president of industry relations for Yahoo. GeoCities chief operating officer Steve Hansen has been named vice president of Yahoo GeoCities operations; he is charged with overseeing the transition. And GeoCities founder David Bohnett will "act as an outside community advisor to Yahoo," the company said.

GeoCities employees, previously based in Santa Monica, California, now will work at Yahoo's headquarters in Santa Clara, California, or in regional sales offices, Yahoo said.

The addition of GeoCities' publishing tools and existing neighborhoods to Yahoo's community tools and services "will significantly expand the publishing options for users and provide for enhanced searching and archiving of user-generated content on the Web," Yahoo said in a statement. In addition, analysts are looking for the combination to open up new commerce opportunities for Yahoo.

"If you look at the GeoCities' last few hundred thousand, almost a million new people coming in and publishing home pages, they have a business component to it," Yahoo president Jeff Mallett told CNET in an earlier interview. "So we see it as a good platform to drive new stores."

Mallett today reiterated that point, noting in an interview with CNET that Yahoo plans to build on GeoCities' existing affiliates program. He also said he expects GeoCities' 4.3 million "homesteaders" to participate in Yahoo Direct, the portal's direct marketing program, based on their areas of interest.

Following Yahoo's first on-site analyst meeting in March, BancBoston Robertson Stephens analyst Keith Benjamin wrote, "We expect the integration of GeoCities will facilitate commerce at Yahoo by generating leads to Yahoo's partnered stores."

Yahoo said it plans to integrate GeoCities tools into areas such as auctions, chat, message boards, and classifieds. It also plans to integrate the community site's home page building services into Yahoo Clubs.

"Upon launch of the integrated community service, Yahoo-GeoCities users will have access to new, easy-to-use, click-and-drag publishing tools, enabling users with no knowledge of HTML to build home pages," Yahoo said.

Bloomberg contributed to this report.