Google Inc. settled a major patent dispute with rival Yahoo Inc. yesterday for about $328 million in stock, removing a legal threat to its online search business and eliminating some of the uncertainty surrounding its impending initial public offering.

In exchange for 2.7 million shares, Yahoo dropped its two-year-old lawsuit, which had alleged that Google infringed on Yahoo's patents for the technology that matches advertising with Internet search results. Google relies on that advertising for more than 90 percent of its revenue.

"We are very pleased to have resolved these issues and with the terms of the agreement," said Google spokesman Steve Langdon.

Google, which has been highly profitable, said in a filing with the Securities and Exchange Commission yesterday that the settlement would force it to report a loss in the current quarter because of a one-time, non-cash charge of $260 million to $290 million.

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Source : WashingtonPost