Ya­hoo rakes in prof­its as it pre­pares for Ver­i­zon deal

Kuwait Times - - TECHNOLOGY -

Ya­hoo’s quar­terly prof­its shot up by more than dou­ble to $163 mil­lion even as it pre­pares for a takeover by Ver­i­zon. The faded in­ter­net pioneer skipped its usual quar­terly earn­ings call with an­a­lysts due to the pend­ing takeover by the US telecom­mu­ni­ca­tion com­pany, for which chief ex­ec­u­tive Marissa Mayer said Ya­hoo is busy pre­par­ing de­spite re­cent rev­e­la­tions about a ma­jor data breach that may af­fect the deal.

“We launched sev­eral new prod­ucts and showed solid fi­nan­cial per­for­mance across the board,” she said in an earn­ings re­lease, which beat ex­pec­ta­tions de­spite only a slight rise in rev­enue.

Shares were up 1.49 per­cent to $42.30 in af­ter-mar­ket trades fol­low­ing the earn­ings re­port re­lease, re­flect­ing con­fi­dence the breach is not prompt­ing a sig­nif­i­cant num­ber of users to aban­don Ya­hoo.

Rev­enue for the quar­ter that ended on Sept. 30 came to $1.3 bil­lion, up from the $1.2 bil­lion in the same pe­riod a year ear­lier. Mo­bile rev­enue dur­ing the quar­ter reached $396 mil­lion, up from $271 mil­lion the pre­vi­ous year. The boost in prof­its came from cut­ting work­ers and costs, not from the strength of its core busi­ness. They hit the mark nev­er­the­less, ac­cord­ing to in­de­pen­dent Sil­i­con Val­ley an­a­lyst Rob En­derle. “For the most part, peo­ple were ex­pect­ing a burn­ing crater where Ya­hoo used to be,” he said. “This is the kind of fi­nan­cial re­port they needed to not in­crease the prob­a­bil­ity that Ver­i­zon runs away scream­ing from the deal.”

Hacks and scans

The be­lea­guered in­ter­net com­pany agreed in July to sell its core as­sets to Ver­i­zon for $4.8 bil­lion, end­ing a 20-year run as an in­de­pen­dent com­pany af­ter sev­eral at­tempts to re­fo­cus failed to help it catch up to Google and Face­book in key seg­ments of on­line ad­ver­tis­ing.

The deal would sep­a­rate the Ya­hoo in­ter­net as­sets from its more valu­able stake in the Chi­nese on­line gi­ant Alibaba. How­ever, Ver­i­zon said last week that a re­cently re­vealed hack af­fect­ing 500 mil­lion Ya­hoo cus­tomers world­wide could have a “ma­te­rial” ef­fect on the deal.

The com­ments from Ver­i­zon general coun­sel Craig Sil­li­man sug­gest the tele­com com­pany could seek to re­duce the pur­chase price or walk away from the deal. Al­though the hack took place in late 2014, Ya­hoo an­nounced it only last month, deal­ing the com­pany a fresh blow.

The at­tack was prob­a­bly “state spon­sored,” it said, al­though some an­a­lysts have ques­tioned the source. “We’re work­ing hard to re­tain their trust,” Mayer said of Ya­hoo’s users, “and are heart­ened by their con­tin­ued loy­alty as seen in our user en­gage­ment trends.”

Ya­hoo’s image took an­other hit re­cently from al­le­ga­tions of mass email sur­veil­lance that trig­gered an out­cry from pri­vacy ac­tivists. Ya­hoo has de­nied do­ing any such thing, re­ject­ing as “mis­lead­ing” a re­port that it se­cretly scanned hun­dreds of mil­lions of email ac­counts to help US in­tel­li­gence.

“We nar­rowly in­ter­pret ev­ery govern­ment re­quest for user data to min­i­mize dis­clo­sure,” the com­pany said in a state­ment to AFP. “The mail scan­ning de­scribed in the ar­ti­cle does not ex­ist on our sys­tems.”

Some ac­tivists de­scribed the al­le­ga­tion as a “bomb­shell” that if proven true could re­veal a new level of sur­veil­lance by the Na­tional Se­cu­rity Agency, al­ready roiled by dis­clo­sures in 2013 by for­mer con­trac­tor Ed­ward Snow­den.—AFP

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