Microsoft and Yahoo will give their search partnership more time to meet their financial expectations. Microsoft has agreed to extend, for another year, its commitment to cover revenue shortfalls experienced by Yahoo in the U.S. since turning over its underlying search technology and related advertising to be operated by Microsoft.
The extension, disclosed in Yahoo’s latest quarterly filing, follows reports of discussions between Yahoo CEO Marissa Mayer and Microsoft CEO Steve Ballmer about the future of the search deal. The guarantees from Microsoft are designed to make up for the shortfall experienced by Yahoo compared to its revenue prior to entering the agreement with Microsoft.
According to Yahoo’s filing, the revenue guarantee had already been extended once in the U.S. and Canada, from the fourth quarter of 2011 through March 2013. “On April 30, 2013, Microsoft extended the RPS Guarantee in the U.S. for an additional 12 months commencing April 1, 2013,” the filing says, as noted by Search Engine Land.
It’s not an insignificant amount of money. Reuters, which originally spotted the filing, reports that UBS analyst Eric Sheridan raised his gross revenue estimates for Yahoo by $60 million over the next four quarters to reflect the extension of the search revenue guarantees.
Microsoft and Yahoo had originally hoped to knock Google down a peg by joining forces, but their partnership has fallen short of expectations. Microsoft originally reached the deal during tenure of Carol Bartz as Yahoo CEO. Mayer, the former Google executive, joined Yahoo as CEO last year.