Yahoo just lost a deal that brought in $100 million a year in almost pure profit
REUTERS/Ruben Sprich
The deal, struck in 2001, had given Yahoo the right to host AT&T's main website and various applications, while providing its search and content services.
The report estimated that Yahoo brought in roughly $100 million in revenue annually from this deal, most of which were pure profit given the low cost of providing the service.
Instead, AT&T has partnered with a company called Synacor to replace Yahoo as its main web service provider, the report said.
Synacor shares were up nearly 90% in after hours following the news. Yahoo shares remain roughly flat.
Yahoo's spokesperson declined to comment on the deal. AT&T's representative was not immediately available for comment.
The news comes at a tough time for Yahoo. The beleaguered web giant has struggled to grow its revenue in recent years, drawing activist investor Starboard Value to pressure the company to sell its core business. Losing a deal that brought in $100 million a year is a big blow for a company seeking a buyer at the highest possible price.
Latest reports indicate big companies like Verizon and private equity firms like TPG to be front-runners for buying Yahoo's core business. Some analysts estimate Yahoo's core business to be worth about $6 billion.
NOW WATCH: How to find out your Uber passenger rating
- Colon cancer rates are rising in young people. If you have two symptoms you should get a colonoscopy, a GI oncologist says.
- I spent $2,000 for 7 nights in a 179-square-foot room on one of the world's largest cruise ships. Take a look inside my cabin.
- An Ambani disruption in OTT: At just ₹1 per day, you can now enjoy ad-free content on JioCinema
- Markets snap five-day rally, Sensex tumbles over 600 pts
- Southern India faces water crisis as reservoir levels plunge to just 17% capacity: CWC
- Indian heart beats inside Pakistani woman, 19-year-old from Karachi undergoes heart transplant in Chennai
- Rupee falls 7 paise to settle at 83.35 against US dollar
- Vegetable prices to remain high until June due to above-normal temperature