A wave of relief must have engulfed Yahoo investors as CEO Marissa Mayer announced on Monday that the Verizon acquisition has been pushed to the second quarter of the current fiscal.
Amidst rumors of Verizon backing out from the deal, investors have been extremely concerned about how the Yahoo hacks revealed in 2016 will impact the sale. These rumors began even before the Securities and Exchanges Commission (SEC) began its probe into the hacks from three years ago.
On Monday, at Yahoo’s fourth quarter 2016 earnings call, Mayer noted:
“Yahoo has continued to work with Verizon on integration planning for the sale of its core business. In terms of timing, Yahoo had previously stated that it expected to close the transaction in Q1. However, given work required to meet closing conditions, the transaction is now expected to close in Q2 of 2017. The company is working expeditiously to close the transaction as soon as practicable in Q2.”
The SEC investigation revolves around why Yahoo took so long to announce the security breaches that occurred in 2013 (1 billion accounts) and 2014 (500 million accounts.)
Verizon executives may still leverage the issue to get a better price on the Yahoo assets purchase, but at least we know that the deal will, in fact, go through this year. The original deal price was estimated at $4.83 billion.
Over the course of 2016, Yahoo has launched numerous initiatives, including Yahoo View on Android and Yahoo Answers Now. In addition, there are now 10 million users on Yahoo Account Key.
Despite its cybersecurity woes and the subsequent SEC investigation, Yahoo seems to have closed out 2016 showing positive revenue growth. GAAP revenue for full-fiscal 2016 stood at $5.169 billion against the 2015 figure of $4.968 billion – a growth of about 4% year over year.
Marissa Mayer was brought in from Google in 2012 to try and turn things around at Yahoo, but that never happened. The company is still showing operating losses as at the last reported quarter.
After the purchase of core assets by Verizon, Yahoo will live on as Altaba, albeit with a smaller board that will be missing not only Mayer, but also Yahoo co-founder David Filo.
Altaba will carry on as primarily an investment company, retaining the 15% stake that Yahoo currently has in Chinese e-commerce giant Alibaba, as well as the 35% stake in Yahoo Japan, a combined $40 billion investment. For now, the “Yahoo-leftover” bits will continue going by their nickname, Remain Co.
There has been some speculation that Alibaba might express an interest in acquiring Remain Co., but the company is firmly under the control of Jack Ma and does not need to own additional shares at this point. But if that happens, then Remain Co. or Altaba won’t have much negotiating power at the table, and could be forced to sell at a discount to the market price.
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