Yahoo is appealing a $2.7 billion fine levied by the Mexican courts for breach of contract.
According to Reuters, the fine was issued for a breach of contract involving an online Yellow Pages style service. However, eyebrows have been raised by the extremely large payment, which was described as a ‘non-final’ judgement.
Yahoo is appealing the decision, claiming that there were errors in procedure as well as in the application of the law.
“We believe the $2.7 billion figure appears high based on the seemingly small size of Yahoo’s business in Mexico, but we believe shares could trade off modestly on the news,” commented JP Morgan analyst, Doug Anmuth.
“It’s not clear how the Mexican court arrived at the $2.7 billion figure, but it would represent 40 percent of our projected 2012 year-end cash balance for Yahoo.”
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