(FORTUNE Magazine) – Netizens have long been googly-eyed over Google. It has all the ingredients of a tasty startup: a search engine that really works and two likable founders in Larry Page and Sergey Brin. It has money from the most sought-after venture capitalists (among them Kleiner Perkins' John Doerr), not to mention all the perks of a happening Net startup--massages for everyone and two in-house chefs. All is in order except one thing: the business model.

To hear Google tell it, great things are afoot. In late June the Mountain View, Calif., company announced that it would replace Inktomi as the search engine to complement Yahoo's directories. It was the kind of "we're playing with the big boys" announcement that startups love to flaunt.

But is a deal like this worth $2.8 billion? That's how much Inktomi's market cap dropped immediately after the news (it has since rebounded). It depends on how you see it. According to Inktomi COO Dick Pierce, the Yahoo account generated a paltry $1 million in revenues for the last quarter. In fact, Sofia Ghachem, a Merrill Lynch analyst, says that Inktomi probably wasn't making any profit at all from its Yahoo deal.

Though he won't give specifics, Google's Page insists his company, which is much smaller than Inktomi, will be able to make money on the deal. And nobody disputes that it was a huge deal in terms of perception. "There's a psychological effect," Pierce acknowledges. "Yahoo is a very good name."

The Yahoo imprimatur increases a company's chances for a high-priced IPO, says Prudential Securities analyst Peter Ausnit. That's what happened with Inktomi two years ago--right after it announced its own Yahoo deal. Then the search engine darling of the moment, Inktomi upped its asking price by $4, to $18 a share, just a day before its IPO and saw its stock double to $36 on its first trading day.

A similar scenario could unfold with Google. CEO Page announced that a stock offering is in the cards--"It clearly makes sense for us to IPO," he says, quickly adding that the company hasn't filled out its SEC paperwork just yet.

It may not be a long wait. At least one key party has a vested interest in promoting Google's IPO. As part of the deal, confirms Yahoo spokesperson Lauren Strain, Google "issued us warrants to purchase their stock." Though Strain would not give specifics--and Google officials declined to comment--Yahoo's warrants will likely position it to make millions when Google goes public.

This kind of mutual back-scratching is common in the Internet world. In 1999, Priceline, on the prowl for cheap airline tickets, won Delta as a new partner. In turn, the airline received warrants of 18.6 million shares--about 12% of Priceline--at 93 cents each. So far, Delta has sold Priceline shares worth more than $240 million. Personal contacts count as well. Michael Moritz, general partner of Sequoia Capital, sits on both Google's and Yahoo's board of directors. And Yahoo co-founder David Filo is close to Google's founders. (All three attended Stanford.) Filo even suggested that Page and Brin start their own company.

All this suggests that Google may be poised for a big IPO. But its post-IPO prospects are still unknown. Page and Brin say their goal is to be the Web's best search engine. That's admirable, but will that turn a profit? As Merrill Lynch's Ghachem puts it, "It's gotten harder and harder for companies in the search space to become profitable." As the "make money" mantra sweeps Wall Street, no dot-com can live forever on technology, page views, and buzz alone. And that's not good news for Google.

A version of this story first appeared in FORTUNE's online column Valley Talk. To subscribe, surf to www.fortune.com/technology/daily.