On Friday, a Mexican court hit Yahoo with a $2.7 billion judgment, ruling that Yahoo was in breach of a contract with a former partner, Ideas Interactivas.The judgement, which is not final and Yahoo will fight, would reduce Yahoo’s 2012 year-end cash balance by nearly 40%.
If the judgement were to be enforced, the loss would be a disaster for Yahoo – especially at a time when its stock is finally on the rise due Yahoo’s plans to spend its large cash pile buying back stock.
On Wall Street, analysts are confused about the whole thing.
JP Morgan’s note on the matter is titled: “Little Clarity on $2.7B Non-Final Judgment.”
He writes: “We believe the plaintiffs Worldwide Directories and Ideas Interactivas’ alleged claims of breach of contract, breach of promise, and lost profits arise from contracts related to a yellow pages listings service called Yahoo! Paginas Utiles announced in April 2003 according to Noticiasdot.com. The website at www.paginasutiles.com.mx is no longer active and it is unclear what happened to the partnership.”
“It’s not clear how the Mexican court arrived at the $2.7B figure.”