Yahoo signs a search advertising Deal with Google

This Tuesday Yahoo said it had made an ad pact with the tech giant Google in order to give a potential boost to efforts of Marissa Mayer (Yahoo CEO) to increase profit growth of the company. Recently reports show that Yahoo is not making it big with its revenue and profits. This deal with Google (which is now a subsidiary of Alphabet Inc.) is based on an already existing search partnership. Yahoo gets a share of the ad revenue from its site as per the partnership.

In after – hours trading Yahoo’s shares went low by 1.6 percent. Therefore the implementation of the deal has been delayed and it will be reviewed by the Antitrust Division of the Dept. of Justice. It’s been a long time that Yahoo has been facing stiff competition from Facebook and Google and has been struggling to boost its profit from the ad sales. This Yahoo – Google deal seems to brighten up Yahoo’s third quarter results. According to reports from Thomson Reuters, Yahoo expected the revenue for the fourth quarter to be below average estimate of $1.33 billion. Mayer who is in her 4th chief executive year commented about the forecast as , “not indicative of the performance we want. We are also experiencing continued revenue headwinds in our core (advertising) business, especially in the legacy portions.” Yahoo might close the proposed spinoff in e-com giant Alibaba Group for 15 percent stake. Earlier this year Yahoo enquired to Internal Revenue Service if any tax obligation would result because of a $27 billion transaction. The request was denied by the tax agency.

However, Yahoo still plans to go with the spin off by the end of the year. A number of analysts don’t consider yahoo’s business void of its Asian assets including 35 percent share in Yahoo Japan Corp. apart from this deal, the only good news we got from Yahoo is its emerging business from what the Mayer calls the ‘Mavens’ – including video, native & social and mobile advertising.

Yahoo accounted a rise of 43 percent in these businesses making $422 million. The analysts gave an average estimate of 17 cents on each if its shares but yahoo earned only 15 cents. Previously recorded revenue of $1.09 billion after paying all its partner websites but this time it fell to $1.0 billion. It is predicted that Yahoo will lose it to $920 – $960 million. Yahoo earlier used to spend $54 million per year for traffic acquisition, but now the costs have risen to $223 million which is a very big margin. Tuesday closed on $32.83 with Yahoo losing 35 percent.

Image Source: businessinsider.in