that provides Yahoo with financial
protection as part of the two
companies' Internet search
partnership.
An arrangement requiring Microsoft
Corp. to pay Yahoo Inc. a minimum
amount per search on Yahoo's website
expired March 31. That had raised
concerns Yahoo might make less
money from the Microsoft
partnership.
Those worries eased Tuesday with a
Yahoo regulatory filing that disclosed
Microsoft is maintaining the revenue-
per-search guarantee through March
2014.
Yahoo rose 90 cents, or 3.6 percent,
to close Tuesday at $26.07. It's the
first time the stock has closed above
$26 in nearly five years, continuing an
upturn that began after Yahoo hired
former Google executive Marissa
Mayer as its CEO nearly 10 months
ago. The shares have surged by 67
percent since Mayer's arrival.
Yahoo, based in Sunnyvale, California,
didn't reveal the minimum amount
that it's likely to see under the
Microsoft guarantee. But Yahoo Chief
Financial Officer Ken Goldman told
analysts last month that Yahoo's
revenue would decline by about $50
million to $60 million during the rest
of this year without the guaranteed
Microsoft payments.
Microsoft extended the guarantee on
April 30, retroactive to April 1,
according to Yahoo's filing.
This is the second time that Microsoft
has extended the guarantee since its
10-year search partnership with
Yahoo began in 2010. The guarantee
originally was supposed to expire in
late 2011, but Microsoft agreed to
protect Yahoo for a longer period
because itstechnology hasn't been
generating as much advertising
revenue as the two sides anticipated.
The alliance calls for Microsoft to
provide its search technology to Yahoo
in exchange for 12 percent of the
revenue from search ads on Yahoo's
site.
The disappointing performance of the
search partnership is one of the
reasons that Yahoo fell into a financial
funk that battered its stock. Yahoo
posted modest revenue growth last
year, the first gain since 2008.
(Also see: Yahoo chief Mayer wants
Microsoft's Bing to step up its game)
Yahoo's filing contained other good
news besides the extension of the
Microsoft guarantee. The documents
also provided more details about the
robust growth at Alibaba Group, a
Chinese Internet company in which
Yahoo owns a 24 percent stake.
Alibaba's earnings during the final
three months of last year more than
doubled to $642 million while its
revenue climbed 80 percent to $1.8
billion. That was illuminating
information because Alibaba is still a
privately held company. Alibaba is
expected to go public within the next
two years, giving Yahoo a chance to
reap a huge windfall by selling its
shares in the company.
Alibaba's earnings last year more than
doubled to $642 million while its
revenue climbed 80 percent to $1.8
billion. That was illuminating
information because Alibaba is still a
privately held company. Alibaba is
expected to go public within the next
two years, giving Yahoo a chance to
reap a huge windfall by selling its
shares in the company.
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