Yahoo (NSDQ: YHOO) and digital video technology firm DivX (NSDQ: DIVX) have settled a ten month old lawsuit over an advertising deal between the two companies. DivX initially sued Yahoo in September, saying that Yahoo had backtracked on a two-year deal, under which it paid DivX so that customers who downloaded DivX video software could also download a version of the Yahoo Toolbar.

Due to the settlement, DivX says in a statement that it is now upping its guidance by 29 cents per diluted share, which would imply a settlement in the range of $9.5 million. The Yahoo deal brought in about $5 million a year in revenue for DivX.

• DivX Files Lawsuit Against Yahoo On Advertising Payment Breach