BREACH BUMMER
Yahoo mess may sink Verizon price – or even deal
Yahoo Chief Executive Marissa Mayer is getting hacked into a corner.
The 40-year-old tech exec and her board will likely be forced to slash the price of a $4.8 billion merger with Verizon if they hope to save the deal — as a massive, 1 billion user e-mail breach has “devastated Yahoo’s leverage at the bargaining table,” according to a source close to the talks.
Mayer, for her part, “has been acting like it’s business as usual” at Yahoo’s headquarters in Sunnyvale, Calif., since the tech-and-telecom tie-up was announced in July, according to an insider close to the company.
Some Yahoo execs, meanwhile, “are barely coming to work, waiting for a check and for [the merger] to be closed,” according to the source.
Yahoo’s C-suite got a wake-up call this week, when the company disclosed the huge cyber-attack. Twice as many user accounts were hit than were by an earlier hack, discovered in September.
Yahoo shares melted on Thursday, its first day of trading since the one billion user account hack was divulged. The stock fell 6.1 percent to $38.41, as investors bet that the price of the Verizon deal will take a significant haircut — if it even closes.
Yahoo’s options as a stand- alone company now appear limited, while Verizon has other media companies it could target — among them Vice, CBS and Charter Communications, sources said.
“No one sees an alternative for Yahoo, so Verizon can push on price,” according to one source close to the talks.
Verizon “will evaluate the situation as Yahoo continues its investigation,” Verizon spokesman Bob Varettoni said in a Thursday statement, and “will review the impact of this new development before reaching any final conclusions.”
Verizon execs are especially concerned that news of the latest breach, which Yahoo said occurred in August 2013, will take a toll on traffic to Yahoo’s home page, a key source of ad revenue.
“Traffic is closely tied to the health of e-mail activity” on Yahoo’s site, according to a source familiar with the com- pany’s operations.
That’s despite protests from Yahoo that its traffic didn’t suffer after it announced the first hack — a 2014 incident that affected 500 million email accounts.
Insiders said such claims are suspect, as e-mail accounts that are idle but technically active wouldn’t be affected.
“Most people in their 50s and 60s don’t take the time to shut down their accounts — they just stop using them,” according to a source close to Yahoo’s operations.
Yahoo’s e-mail breaches have divided Verizon execs into two camps — one for the merger, and one against, according to sources.
Skeptics fret that Yahoo is a risky use of Verizon’s cash as the telecom grapples with labor strikes on the one hand, and a range of potentially attractive mergers and acquisitions alternatives on the other.
Meanwhile, AOL CEO Tim Armstrong continues to push for the merger, which would add Yahoo’s Web properties to AOL, which already contain the Huffington Post, and distribute them directly to the millions of customers on Verizon’s telecom networks.
“You have Tim and his people, who want the AOL acquisition to be more successful,” a source said. “While concerned [about the e-mail breach], he is as committed as ever.”