Following this new development, DivX is revising its revenue and earnings estimates for the fiscal year ending Dec 31, 2008. Yahoo accounted for about 21 percent of its media/distribution segment for Q308, which is about $1.1 million out of $5.3 million revenues. It anticipates that its revenues for 2008 will range from $90 million to $92 million as compared to its previous estimates of $95 million to $97 million, which means that the Yahoo deal was worth at least $5 million for this fiscal year. The Yahoo agreement was supposed to run until end of 2009. DivX is now searching for a replacement partner for the deal. More details in release.

Update: Yahoo’s statement: “Yahoo and DivX have been working together to restructure the toolbar distribution relationship the companies entered into in September 2007.  Unfortunately the companies could not come to an amicable resolution as of this time. Yahoo! is disappointed with DivX’s decision to pursue legal action rather than renegotiate this agreement.  We intend to vigorously defend ourselves in court, but will reserve further comment until we’ve had an opportunity to review the suit.”