For quite some time, AT&T and Yahoo have worked very closely together. Yahoo managed AT&T's main web portal for both web and mobile, hosting it and helping with user search inquiries. This got Yahoo a nice chunk of search revenue springing from AT&T's main page and used frequently by many AT&T home and mobile internet customers. Not to mention, a great deal of media and advertising on the page was handled by Yahoo as well. To add to the lucrative relationship, Yahoo has also hosted AT&T's email service for a number of years. However, AT&T made an announcement on Wednesday that the portal hosting and management deal was off and would be given to industry insider Synacor instead.
Yahoo is still set to manage email for AT&T, but the loss of the hosting and management services for AT&T's main portal is a definite blow for Yahoo who already in danger of being sold; analyst Sameet Sinha estimates that the deal has brought in about $100 million a year for Yahoo. Yahoo's Q1 2016 earnings showed total revenue was just shy of $1.1 billion, a loss of nearly 20 percent year-over-year and even quarter-over-quarter from for the last quarter of 2015. Naturally, this recent loss of business isn't going to help much in their bid to turn the tide before being forced to sell. To make matters worse, advertising partners, investors and other elements that could help Yahoo get back on its feet are, for the most part, wary about extending a hand to the former titan.
With their financial state already in such decline, Yahoo will also be seeing their Yahoo Japan licensing contract with Softbank, the Japanese firm that owns Sprint, running out in 2017. The contract paid Yahoo about $200 million per year, though a separate, non-expiring license for Yahoo's worldwide operations and Softbank will keep about half of that revenue flowing. Even so, things definitely don't look good for the once-mighty internet company. Synacor has said that they will be deploying their services for AT&T's portal over the next 12 months or so and that the deal should bring in roughly $100 million per year, through splitting search and advertising revenue on the page with AT&T, roughly the same sort of arrangement AT&T had with Yahoo.