Yahoo! (YHOO) management must feel snake bit. It now has a legacy problem going back to 2001. Its deal with AT&T (T) to jointly market broadband service is about to come apart. The partnership brings in over $200 million a year plus traffic to Yahoo! that it turns into ad dollars. With 2006 net income of $751 million, the dollars involved are significant.
First, Yahoo! management had to deal with a delay in its new Panama search software, then poor results in Q3 and Q4 of 2006 as its internet advertising slowed.
The launch of Panama brought some investors back to Yahoo! and its shares are up 20% this year. Up until now, and with the AT&T news that may change.
Google (GOOG) is now paying companies for access to customers and the AT&T deal with Yahoo! points the other direction.
The fact is that Yahoo! is old enough as a company to have legacy problems like this one. Google is not.
Apparently AT&T offered to buy Yahoo! last summer. Management at the internet company demurred. Now, they may wish they could reconsider.
One thing is certain. The internet is now old enough to have a history.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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