Was The AT&T Deal Worth $2 Billion To Yahoo?

Posted: March 9, 2007 at 1:06 pm

Yahoo! (YHOO) lost $2 billion in market cap today on the news that its deal with AT&T (T) may be re-negotiatied. The partnership pays Yahoo! over $200 million a year, according to The Wall Street Journal, so the market values that revenue at a multiple of about 10X. Yahoo! trades for 6.5x revenue, so the hit is especially big.

Yahoo!’s shares are down 5.2% to $29.12. That takes away almost all of its gains for the past month which came on positive news about its new Panama advertising search technology.

Douglas A. McIntyre

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