Verizon assesses multiple woes in bid for Yahoo
Verizon, which is in the midst of acquiring Yahoo, said lawyers from both companies have just begun meetings to assess the damage of a breach that came to light last month.
Attorneys for Verizon had their first call Wednesday with Yahoo’s own legal team to discuss the breach, which involved the theft of at least 500 million Yahoo accounts in 2014. “We are still eval- uating what it means for this transaction,” said Verizon CFO Fran Shammo during a conference call Thursday discussing the telecommunications giant’s third-quarter earnings.
“This was an extremely large breach that has received a lot of attention from a lot of different people. So we have to assume that we’ll have a material impact on Yahoo,” Shammo said. “From what I understand (the evaluation) is going to be a long process. ... We haven’t reached any final conclusions around this issue.”
Verizon (VZ) shares fell 2.6% to $49.06. They’re up 6% for the year. It emerged as the winning bidder for Yahoo’s core assets in July, saying it would pay $4.83 billion for Web services like Ya- hoo Mail and Yahoo Sports in a strategy aimed at wrestling mobile Internet ad dollars from Google and Facebook.
Other market conditions including the recall of the Samsung Galaxy Note 7 and lack of supply of the new iPhone 7 cut into Verizon’s third-quarter earnings, he said. The Samsung Note 7 problems and eventual recall “definitely impacted our growth because, historically, Verizon has always been the leader in highend Samsung phones,” Shammo said. Also in September, the iPhone 7 launch resulted in the usual backlog of unfilled orders.
Other factors included aggressive unlimited data plans from competitors such as T-Mobile and Sprint. “When the competitive world launches new price plans, and this quarter it was around unlimited ... there’s going to be a two- to three-week period of time where there is an impact to our growth and we saw that,” he said.
For the July-September period, Verizon’s adjusted earnings of $1.01 per share beat the 99 cents expected by S&P Global Capital Intelligence.