Yahoo hits Mexican speed bump on road to recovery

By Quantum Capital Fund

There are a few key steps that companies need to follow if they want to successfully execute a recovery program. One of these steps is towing the line and giving off the perception that the company is acting in an ethical, legal and responsible manner.

This is the situation which Yahoo finds itself in after hitting a speed bump in Mexico on its road to recovery. After a Mexican court originally ruled that Yahoo must pay $2.75-billion in damages relating to a breach of contract lawsuit, a superior court lowered the amount to $172 500.

Technology website cnet.com reports that apparently, the dispute involved a business venture formed by Yahoo, Worldwide Directories and Ideas Interactivas between 2002 and 2004 for an online business search. The agreement was supposed to last until 2009, but Yahoo canceled the deal, allegedly causing Ideas Interactivas to go bankrupt.

Cnet adds that the payment decrease is likely to be welcome news to the tech company. Damages of $2.75 billion is a huge portion of the company's revenue -- in Yahoo's most recently reported quarter, it only generated $1.07 billion in revenue.

Although Yahoo will be able to cope with the decreased fine better than the original ruling, the company would have preferred to avoid the matter altogether.

Public perception plays a major role in a company’s recovery efforts. If the public loses faith in a company, it needs to ride out the storm and hope for survival. This was the situation which Facebook found itself in after it had to answer charges brought against it by the FTC regarding privacy infringement with its Sponsored Stories Law Suit. For a long time the public lost a bit of faith in Facebook, which forced the company to admit its guilt and focus its efforts on regaining trust through mobile growth.

The road to recovery is paved with challenges and many companies don’t need to have further obstacles placed into their path because of unforeseen actions.