• by August 10, 2004

So just when you thought the Google IPO was a slam dunk for this week, word came Monday that the search giant agreed to grant rival Yahoo! 2.7 million shares in order to settle a patent dispute and an issue regarding warrants on share purchases.

The news came as a result of a filing with the SEC. This may or may not be the final hurdle before the switch on the IPO is thrown. In exchange for the transfer of shares, worth an estimated $300 million, give or take, Google gets a perpetual license to a Yahoo!-patented technology that matches online ads to search results. The company depends heavily on the ad-matching technology that was created by Yahoo! subsidiary Overture Services. Overture sued Google in 2002 over the technology. At the time, Google contended that it used its own ad-matching technology which didn't compromise Yahoo!'s patent.

But yesterday's settlement will cost the Mountain View, Calif.-based Google. The company will record a net loss in the third quarter attributed to the non-cash expense.

According to published reports, Yahoo!, in a revised prospectus filed by Google, will sell more than one million shares as part of Google's impending IPO.