Yahoo reveals new figures on its deal with Microsoft

Figures updated at the behest of the SEC

Following a request from the Securities and Exchange Commission (SEC) for more information concerning its revenue in the fiscal year of 2012, Yahoo Inc. has released details about the money it made in a partnership with Microsoft.

The partnership was originally forged in 2009 in response to competition from search engine provider Google Inc. While Yahoo’s original report stated that the Microsoft partnership was responsible for only 10 percent of its revenue, the update bumped that figure to 31 percent.

In the partnership, Yahoo uses Microsoft’s Bing search engine to provide results for its users, and Microsoft receives a cut of the revenue gleaned. Originally Yahoo requested to partner with Google for this purpose, but that deal was struck down due to antitrust concerns.

In the letter to Yahoo, the SEC probes the 10 percent figure initially offered. “On page 71 you disclose that revenue under the Search Agreement with Microsoft represented more than 10 percent of the company’s revenue during 2011 and 2012. Please tell us what consideration was given to quantifying the percentage or amount of revenues attributable to the Microsoft arrangement to more clearly demonstrate the significance of this concentration,” the letter requests.

The move comes as Yahoo continues to receive scrutiny as a result of its newly hired CEO, Marissa Mayer, who was hired away from Google. October figures indicate that fourth-quarter sales, excluding revenue passed to partner sites, would come in around $1.18 billion to $1.22 billion. This was short of the original estimate of $1.25 billion.

Yahoo’s partnership with Microsoft will elapse in 2015, at which point it will be able to renegotiate the terms of that agreement or request partnership with another search provider. Threatening to do the latter could allow Yahoo to negotiate more attractive terms for itself.

 

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