DivX accuses Yahoo of breach of contract

MPEG 4 specialist DivX has filed a lawsuit against Yahoo for an alleged breach of contract. According to a news release, DivX has accused Yahoo of unlawfully wanting to terminate an advertising partnership over two years agreed in September 2007, and is seeking damages at the California Superior Court in Santa Clara.

All customers who have downloaded the DivX video software since the end of 2007 have also received a Yahoo toolbar and a version of Internet Explorer 7 preset for use with Yahoo. DivX has revised its projected revenue for 2008 because of Yahoo's failure to make payments in connection with this agreement. Instead of $95 million to $97 million, the company's total revenue is now estimated to be $90 million $92 million, said the release. This action adds to Yahoo's problems today as Jerry Yang, its CEO, resigned.

(djwm)