Yahoo’s Verizon sale delayed.
CEO says opportunities with Verizon still ‘look bright’; Q4, full-year earnings beat Street
SUNNYVALE — Yahoo’s beleaguered CEO Marissa Mayer on Monday said she was “very pleased” with last quarter’s financial results, as the firm announced its multibilliondollar sale to Verizon has been delayed.
Yahoo beat Wall Street’s expectations for both the fourth quarter of 2016 and the year as a whole. The troubled firm reported $1.5 billion in quarterly revenue, topping analysts’ forecast of $1.4 billion, and beat the $5 billion annual-revenue prediction by $200 million.
“I’m very pleased with our Q4 results and incredibly proud of the team’s execution on our 2016 strategic plan, particularly given the uniquely eventful past year for Yahoo,” Mayer said in
a statement. “We continued to build our mobile and native businesses ... while operating the company at the lowest cost structure in a decade.”
“The opportunities ahead with Verizon look bright.”
The $4.8 billion Verizon deal, thrown into uncertainty by revelations last year of massive hacks of Yahoo users’ data, was supposed to close in the first quarter of this year, but the closing is now expected in the second quarter, Yahoo reported Monday.
Mayer’s praise of the firm’s performance stands somewhat at odds with the data-breach troubles affecting the Verizon sale, CFRA Research analyst Scott Kessler said.
“While I can understand that they want to put on a happy face, the reality is that there still are significant uncertainties as to whether or not the transaction gets completed as had initially been contemplated,” Kessler said. “It’s an open question as to whether or not the terms are going to be revised. The fact that they pushed the deal out probably is not great news on that front.”
Yahoo has some justification for hyping its performance, Kessler said. “They did have a decent Q4 (and) you didn’t really see a big dropoff in their metrics.” But while Yahoo appears to be portraying stability within the company, it remains to be seen whether Verizon will be convinced, Kessler said.
Yahoo’s 2013 breach of more than a billion user accounts was followed by a hack in 2014 of at least a half-billion accounts that Yahoo discovered the same year but didn’t reveal until 2016.
The Securities and Exchange Commission is investigating Yahoo to discover if the company should have reported breaches earlier to investors, The Wall Street Journal reported Monday, based on interviews with anonymous sources.
Verizon said Monday it wouldn’t comment on Yahoo’s performance and the sale, “pending the assessment of the impact of the breaches.” Still, amid the turmoil, Yahoo managed an upbeat earnings report. The company beat expectations on earnings per share, with 25 cents for 2016’s fourth quarter and 62 cents for the year, compared with the predicted 21 cents and 58 cents.
Yahoo reported $162 million in profit for the fourth quarter and a $214 million loss for the year.
It surpassed its revenue performance from the previous year, when fourthquarter and year-end revenues were slightly lower at $1.3 billion and $5 billion.
Yahoo’s reporting “looked good by not being terrible,” said Pivotal Research analyst Brian Wieser. “The numbers were weak. If you have incredibly low expectations, it was wonderful.”
Mayer’s management team seems to have never realized that other internet companies were eating its lunch, Wieser said.
“They didn’t recognize the overwhelming and structural dominance of Google and Facebook,” Wieser said. “You have to start with that as your understanding of the market. It’s not enough to have an engaging platform.”
Wieser said he believed the Verizon sale would go through, at a discount that may amount to about $1 billion.
In the earnings statement, Mayer said enhancing users’ security is Yahoo’s top priority. “With security protocols and password changes in place, approximately 90 percent of our daily active users have already taken or do not need to take remedial action to protect their accounts, and we’re aggressively continuing to drive this number up,” Mayer said.
Yahoo, for the second quarter in a row, declined to conduct the customary earnings-report conference call with analysts, citing the sale to Verizon.