Question-and-Answer Session
Operator
(Operator Instructions) We’ll take the first question from Christa Quarles. Madam, your line is live.
Christa Quarles - Thomas Weisel Partners
Three questions, I guess the first one is really centered on Yahoo!. I think you guys were anticipating some of these quality base pricing impacts into Q2. I was just wondering what changed relative to what you had begun the quarter seeing and what had ended the quarter seeing. And in particular, what has Yahoo! said to you that makes you confident in further initiatives that you chose to sign with those guys for another two years? It sounds like you will be getting a price or a split increase in next year. I was just wondering if you could comment just generally on Yahoo!, and then I have two follow-up questions.
Russell C. Horowitz
Sure. In the last quarterly call, we received some questions about what we are seeing with Panama and Yahoo!’s monetization and we said that we were in close communications with them on their product roadmap and also expectations for monetization. And we were neutral and we took a wait-and-see attitude.
We clearly have been communicating and collaborating closely with them and we have a lot of belief in the direction that they are going and we think our views of where the opportunities are are fairly closely aligned.
So in terms of our guidance today, we think the way that they are building their products in the short-term could have a modest negative impact, and that’s a conservative approach to what we’re seeing and in our communications with them. But we think the ingredients are in place for them to see increased monetization over time and clearly that is something we look to benefit from. And in the context of a new deal, yes, we did get increased economics going forward and we hope the combination of all the variables that impact monetization come together to create a very favorable environment for us when we look at 2008 and beyond. Obviously the product flexibility is the key component for us as well when we look at our vision for product evolution and being able to deliver high utility for consumers through our websites.
Christa Quarles - Thomas Weisel Partners
And then it only looks like you generated about 5% of your direct traffic yourself and 95% through Yahoo!. Is there an expectation that should meaningfully shift in the coming quarters?
