AT&T Leaves Yahoo! For Synacor

(RTTNews) - Telecom giant AT&T Inc. (T) has awarded a contract to host its web and mobile portals to Synacor Inc. (SYNC), ending a major portion of its 15-year old deal with Yahoo! Inc. (YHOO).

The move by AT&T deals a blow to Yahoo!'s already shrinking search and display ad business and comes at a time when the struggling Internet giant is weighing offers from potential bidders.

The transition to Synacor will take place over the next one to two years. However, Yahoo! will continue to host email for AT&T customers. Shares of Synacor are skyrocketing and are currently gaining 124 percent.

The revenue-sharing deal between AT&T and Yahoo! had generated millions of dollars in revenue to Yahoo!. It had also provided AT&T broadband customers access to Yahoo!'s search engine and other media services on the AT&T website. Both the companies were sharing the search and display ad revenue from the site.

Yahoo! is currently seeking bids for its core web businesses, which include its search and media content operations. However, further loss of revenue for the company could deter its potential suitors.

Yahoo! under CEO Marissa Mayer has been struggling for last few years to win the back the market share it lost to Internet giants like Facebook and Google.

Meanwhile, Buffalo, New York-based Synacor said in a separate statement that AT&T has awarded a portal services contract to Synacor.

Under the deal, Synacor will partner with AT&T to develop and manage desktop and mobile portal services designed to drive user engagement, populate these with rich content sourced from popular brands, and monetize these through search and advertising.

Synacor expects revenue from the contract to be about $100 million per year, after full product deployment in 2017. The company said that early products will be deployed in the second quarter of 2016, with broader services slated to commence deployment in the fourth quarter of 2016.

Synacor CEO Himesh Bhise said, "We are thrilled that AT&T will be using our managed portal services, mobile apps, and advertising solutions in this important initiative to deepen engagement with their customers. We already are developing initial products for deployment in 2016, and have started working on a next-gen product for 2017."