DivX Settles Yahoo Lawsuit

    August 20, 2009

Yahoo may not exactly have come out on top, but it doesn’t need to worry about a DivX lawsuit any longer.  The two companies have reached a settlement, and it looks like DivX received a considerable sum of money.

Dan HalvorsonDivX accused Yahoo in November of abandoning a two-year advertising services agreement.  Dan Halvorson, Executive Vice President and CFO of DivX, sort of announced a win in a statement yesterday by saying, "We are pleased to have this matter resolved."

He then launched right into a finance-related discussion.

"The litigation settlement will increase our operating income in the third quarter of 2009," Halvorson continued.  "As a result, we have upwardly revised our GAAP earnings guidance for the third quarter by $0.29 per diluted share, or $0.17 per diluted share net of related taxes, and now expect GAAP earnings to be in the range of $0.10 to $0.12 per diluted share."

So Yahoo paid DivX something in the neighborhood of $9.5 million, according to Joseph Tartakoff‘s math.

That can’t thrill Carol Bartz, who’s been trying hard to reduce costs and save money since taking over the company.  Still, since Yahoo agreed to the settlement, the payout presumably represents a better alternative than continuing to fight the lawsuit.