| SAN FRANCISCO
SAN FRANCISCO May 7 Microsoft Corp
extended the revenue guarantee it provides to Yahoo Inc
in the companies' underperforming search partnership, Yahoo said
The U.S. revenue-per-search guarantee, which had expired on
March 31, will be extended for one year, and took effect on
April 1, Yahoo said in its 10Q filing with the Securities and
Exchange Commission on Tuesday.
Yahoo also disclosed strong financial results at two of its
Asian assets on Tuesday. Chinese e-commerce company Alibaba
Group, in which Yahoo owns a 24 percent stake, grew revenue
roughly 80 percent year-on-year to $1.84 billion in the last
three months of 2012.
Yahoo Japan, in which Yahoo owns a 35 percent stake,
increased its net income by 13 percent to $343 million in the
last three months of 2012.
Shares of Yahoo were up 3.4 percent at $26.02 in mid-day
trading on Tuesday.
Extension of the search revenue guarantee marks Yahoo's
first agreement with Microsoft since Marissa Mayer became Chief
Executive of Yahoo in July. Mayer, who is seeking to reverse a
multi-year decline in Yahoo's revenue and in its online traffic,
has been critical of the Microsoft partnership struck by former
Yahoo CEO Carol Bartz.
"We need to see monetization working better because we know
that it can and we've seen other competitors in the space
illustrate how well it can work," Mayer said of the deal during
an investor conference in February.
Yahoo and Microsoft began a 10-year search partnership in
2010, hoping their combined efforts could mount a more
competitive challenge to Google Inc, the world's No.1
search engine. But the partnership has not lived up to
Google remains the dominant search engine, with roughly two
thirds of the U.S. search market, while Microsoft and Yahoo's
combined share of the market is essentially unchanged.
What's more, the advertising rates that Yahoo reaps from the
search ads on its website are below the levels it generated
before partnering with Microsoft.
Under terms of the search partnership, Microsoft guaranteed
for 18 months the revenue per search for ads that appear on
Yahoo sites. In 2011, the companies extended the guarantee
through March 2013.
In a note to investors on Tuesday, UBS analyst Eric Sheridan
said he was raising his gross revenue estimates by $60 million
over the next four quarters as a result of the extension of the