Yahoo Cozies Up With Google On Search Ads Following Q3 Profit Miss

After falling short of financial expectations in the third quarter of 2015, Yahoo is hoping that Google can be the catalyst in its ongoing turnaround effort. As such, Yahoo is turning to the Mountain View giant to provide a bit of search and advertising as the company narrows its focus on its core business.

More on the deal in a moment, but first, let's have a look at some numbers. Yahoo reported $1.2 billion in revenue for the quarter, up from $1.15 billion in the same quarter a year ago. However, net income was only $76 million, or 8 cents a share, way down from $6.77 billion, or $6.70 a share, from a year ago.

Yahoo also reported a $42 million write-down related to its original video content, such as Community and Sin City Saints.

Yahoo Building

A potential light at the end of the tunnel for investors is Yahoo's decision to do business with Google, which will replace some of the search and advertising that's currently provided by Microsoft Bing.

"In October, the Company reached an agreement with Google that provides Yahoo with additional flexibility to choose among suppliers of search results and ads. Google’s offerings complement the search services provided by Microsoft, which remains a strong partner, as well as Yahoo’s own search technologies and ad products," Yahoo said.

Marissa Meyer

Marissa Meyer, now in her third year as CEO of Yahoo, needs this deal with her former employer to be a success. At the same time, she was careful to orchestrate an agreement that wouldn't bind Yahoo to Google as the sole provider of search and ads.

"Under the Services Agreement, Yahoo has discretion to select which search queries to send to Google and is not obligated to send any minimum number of search queries," Yahoo explained on Twitter. "The Services Agreement is non-exclusive and expressly permits Yahoo to use any other search advertising services, including its own service, the services of Microsoft Corporation or other third parties."

An interesting side note to all this is the growth in mobile. Yahoo continues to see more traffic from smartphone devices, with mobile revenue accounting for 24 percent of traffic-driven dollars in the third quarter of 2015, up from 20 percent a year ago.


Via:  Yahoo
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