According to Doug Anmuth of Barclays, Yahoo will start losing incremental EBITA from its partnership with Microsoft if its search share drops beneath 11% at any point in the next three years.
Based upon its recent performance, I’d say the odds of this happening by the end of 2010 are pretty strong:
Apparently, Barclays also sees this possibility, as evidenced in its scenarios for Yahoo’s share–
Every 100 bps of market share is equal to roughly $60 – $80 million of annual gross revenue and $35 – $50 million of annual EBITDA for Yahoo!.
Our Baseline scenario represents our current estimates and assumes share declines to 16.8% in 2012.
Our Moderate share loss scenario assumes share falls to 14% in 2012 resulting in revenue and EBITDA that is $77 million and $69 million lower than our current projections.
Our Accelerated loss—or worst case—scenario assumes Yahoo!’s share falls from ~18% today to 10% share in 2012, impacting Yahoo!’s total revenue by 6.5% ($427 million) and EBITDA by 13.8% ($317 million) relative to our current estimates, more than offsetting the benefits of the MSFT Partnership. [Which are ~$275 M]
via Why Yahoo Cant Let Search Share Keep Slipping MSFT, YHOO.
