Yahoo CEO Marissa Mayer Offers No New Information on Massive Hack, as Questions Persist About Verizon Deal
Yahoo CEO Marissa Mayer said the company remains “very confident” in the value of its business — even as Yahoo’s disclosure last month that info on more than 500 million email accounts was stolen by hackers in 2014 could lead Verizon Communications to renegotiate or abandon its proposed $4.8 billion deal.
Mayer, in prepared remarks announcing Yahoo’s third-quarter 2016 results, shed no new light on the security breach. “We take deep responsibility in protecting our users and the security of their information,” the exec said. “We’re working hard to retain their trust and are heartened by their continued loyalty as seen in our user engagement trends.”
Overall, Yahoo posted revenue of $1.31 billion, in line with Wall Street expectations. It reported adjusted earnings per share of 20 cents, beating analyst forecasts of EPS of 14 cents. But revenue excluding traffic acquisition costs — money it pays to search partners including Google and Microsoft — fell 14% year over year, to $858 million and adjusted earnings excluding TAC dropped 6%, to $229 million.
Layoffs helped Yahoo cut its operating loss in Q3 to $52 million, compared with $86 million in the year-ago period. As of the end of September, the company’s headcount was 8,500, down 21% approximately 2,200 year over year.
Yahoo isn’t holding an earnings call or webcast for its Q3 earnings, citing the “pending transaction with Verizon.”
“In addition to our continued efforts to strengthen our business, we are busy preparing for integration with Verizon,” Mayer said in a statement. “We remain very confident, not only in the value of our business, but also in the value Yahoo products bring to our users’ lives.”
Verizon — along with millions of Yahoo users — was caught unawares by the massive security breach. When Yahoo announced the user-info breach on Sept. 22, Verizon said that it had only been informed of the scope of the breach two days prior.
Last week, Verizon’s top lawyer said the Yahoo breach represented a “material” event that could open to door to the telco renegotiating the terms of the deal. “I think we have a reasonable basis to believe right now that the impact is material and we’re looking to Yahoo to demonstrate to us the full impact,” Verizon general counsel and executive VP of public policy Craig Silliman said at a reporters’ roundtable in Washington, D.C. “If they believe that it’s not, then they’ll need to show us that.”
In response, a Yahoo rep said, “We are confident in Yahoo’s value and we continue to work towards integration with Verizon.”
Yahoo said the 2014 security breach was the work of a “state-sponsored actor,” but it hasn’t identified which country was behind the hack. Nor has the company provided an explanation for why it took two years to disclose the incident. Six U.S. senators have asked Mayer to provide more details on its handling of the breach; Yahoo said it will respond to the inquiry “in a timely and appropriate manner.”
Yahoo reached the deal with Verizon in July to sell its declining web businesses for $4.8 billion, plus an estimated $1.1 billion in payments for restricted stock at closing. The telco sees synergies in combining Yahoo with AOL, which it bought for $4.4 billion last year, to achieve greater audience and advertising scale. Previously, the companies had said they expect the deal to close in the first quarter of 2017.
The disclosure of the two-year-old security breach — the largest single theft of user data to date — has raised questions about when Yahoo knew about the hack and the nature of its severity. In a Sept. 9 proxy statement, Yahoo said it was not aware of any security breaches. That was after Yahoo had acknowledged in early August that it was investigating a report that a Russian cybercriminal was advertising the sale of 200 million Yahoo user accounts in a black-market online forum, as first reported by Vice’s Motherboard.
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