Shares in Synacor spiked more than 119% in after-hours trading Wednesday after AT&T awarded the Buffalo, N.Y.-based company with a beefy portal services contract.
They said the expected revenues from the contract are expected to be about $100 million per year after full product deployment sometime in 2017. Early products will get underway in Q2 2016, with more to commence by Q4 2016.
Per the deal, Synacor’s on tap to develop and manage desktop and mobile portal services for AT&T “to drive user engagement.” The portal will be populated with “rich content sourced from popular brands,” and will be monetized through search and advertising.
The value of the AT&T agreement is a massive one for Synacor, which posted total revenue of $110.2 million in 2015 alone, with $78.3 million coming way of search and advertising revenue.
While obviously good news for Synacor, it was not so for Yahoo. The new deal “effectively moves a major chunk of AT&T’s business away from Yahoo,” which has had a partnership with AT&T going back about 15 years, The Wall Street Journal reported.
The AT&T-Synacor deal enters play amid upheaval at Yahoo, which is seeking to sell its Internet assets, with AT&T competitor Verizon expected to make a bid in the first round.
“We are honored to have been selected from among the contenders AT&T considered in their evaluation process,” Synacor CEO Himesh Bhise said in a statement. Synacor has scheduled a call for Thursday morning to discuss the deal in more detail.
Synacor shares were up $1.69 (119.86%), to $3.10 each in after-hours trading Wednesday.