Mozilla Could Get About $1 Billion if Yahoo (YHOO) Sells, Recode's Swisher Explained on CNBC

Under private contract terms, Mozilla could make more than $1 billion by 2019 if it does not want to work with Yahoo's (YHOO) buyer, Recode's Kara Swisher said on CNBC.
By Lindsay Rittenhouse ,

NEW YORK (TheStreet) -- The company that acquires Yahoo (YHOO) may have to give Mozilla monthly payments of $375 million through 2019, if the Internet software developer does not want to work with its buyer, Recode Executive Editor Kara Swisher explained on CNBC's "Squawk Alley" Friday.

Under contract terms released to Recode, Yahoo CEO Marissa Mayer agreed to pay Mozilla more than $1 billion by 2019 if the search engine giant were to ever be acquired by a corporation that the web browser company does not agree with, according to Swisher.

If that happens Mozilla could walk away from the 2014 deal that made Yahoo its default search browser, but still receive annual revenue guarantees of $375 million per month, Swisher continued.

"It's not a very good deal point. The concept is Mayer didn't think the company was going to be sold so why not throw that in there as a sweetener, I guess?" Swisher said. Mozilla ditched its contract with Alphabet's Google (GOOGL) when it switched to Yahoo.

The "astonishing" clause is worrying some of Yahoo's potential buyers, Swisher added.

"The contract is not public but several buyers sent me a copy of it and they're disturbed by it," she noted.

Several corporations such as Verizon Communications (VZ) have made bids to acquire Yahoo, which will make a final selection toward the end of July.

Shares of Yahoo are higher by 0.53% to $37.72 this afternoon.

Separately, TheStreet Ratings rated Yahoo as a "hold" with a score of C-.

The primary factors that have impacted this rating are mixed. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins.

However, as a counter to these strengths, TheStreet Ratings also finds weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself.

You can view the full analysis from the report here: YHOO

TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.

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