Yahoo Acquisition By Verizon Still Happening, Just Delayed Amid Fallout From Security Issues


Yahoo was able to book earnings of 25 cents per share on revenue of $1.47 billion in the fourth quarter of 2016, beating analyst forecasts of 21 cents per share on revenue of $1.38 billion.

The higher-than-expected earnings for Yahoo is a much-needed bright spot for the company, as it continues to suffer from the fallout of several security issues that plagued Yahoo last year.

Yahoo Security Issues

In December 2016, Yahoo identified another security breach against its systems that compromised the data of its users. The breach, which occurred in August 2013, was said to have compromised more than 1 billion Yahoo accounts.

This security breach is different from the one that Yahoo revealed in September 2016. In the first incident, the company said that 500 million users had their data compromised, with the security breach happening in late 2014.

Yahoo is now under investigation by the Securities and Exchange Commission for the two massive security breaches, as the SEC seeks to determine whether Yahoo should have released reports regarding the incidents sooner.

In addition to the security breaches, reports that broke out in October 2016 claimed that Yahoo built and implemented software that helped the United States government scan the e-mails of its users. Follow-up reports revealed that the tool was not a mere upgrade to the scanning system of Yahoo to fight against things such as spam and child pornography, but it more closely resembled a form of malware known as a rootkit.

With all these security issues, despite the better-than-expected performance for the fourth quarter of 2016, is Verizon still interested in buying Yahoo?

Verizon Still Pushing Through With Yahoo Purchase

"The opportunities ahead with Verizon look bright," said Marissa Mayer, the CEO of Yahoo, in a statement, adding that the company's commitment to its users will continue and that Yahoo is encouraged by the loyalty shown by users with their continued usage of its products and services.

However, it is to no surprise that instead of the planned first-quarter closing of the acquisition deal by Verizon, the transaction is now expected to be completed in the second quarter. Yahoo cited that the delay was due to the necessary work needed to meet the conditions for the closing of Verizon's purchase of the company.

Yahoo's statement on the delay for the closing of its sale to Verizon raises more questions, but unfortunately, Mayer will not be providing answers. This is because the company's earnings call with analysts, a usual procedure for public companies after they disclose their financial results for a period, has been cancelled, with Mayer being made unavailable for interviews. This is the second quarter in a row that Yahoo has not set up a quarterly earnings call, with the reason again being said to be the pending transaction with Verizon.

There were several options that Verizon could choose from if it decides to cancel its acquisition of Yahoo, but it seems that the carrier is pushing through with the transaction. After completion, Mayer will be resigning from Yahoo's board of directors, with the company to be renamed Altaba.

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