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Yahoo sees Verizon Deal Closing in Second Quarter and Beats Wall Street View


Yahoo sees Verizon Deal Closing in Second Quarter and Beats Wall Street View
Allaying some investor concerns that the deal might collapse, Yahoo Inc said that in the second quarter, the sale of its core internet business to Verizon Communications Inc should be completed. The company said this as it reported a better-than-expected quarterly profit and revenue.
The disclosure of two major cyber breaches that exposed information from more than a billion Yahoo accounts resulted in the delay of the $4.8 billion Verizon transaction that had originally been expected to close in the first quarter.
The Wall Street Journal reported that a probe into whether Yahoo's data breaches should have been disclosed sooner to investors has been opened by the Securities and Exchange Commission.
A 2013 breach announced in December and a 2014 security breach announced in September had cost the company spending approximately $10 million, Yahoo said.
Some belated vindication of embattled Yahoo CEO Marissa Mayer's strategy was provided by the operating results for the fourth quarter, featuring a 15 percent gain in revenue from a year ago. In heavy after-market trading, the company's shares rose 1.2 percent to $42.90.
There was a rise of 25 per cent in the revenues generated from Mavens - the mobile, video, native and social advertising units that Mayer has long touted as key emerging businesses to reach $590 million.
As Yahoo struggled to win back market share from bigger rivals such as Alphabet Inc's Google, gross search revenue fell 6 percent to $821 million.
Cautioning that search was on the decline and display would be in decline if the numbers were crunched differently, Cantor Fitzgerald Analyst Youssef Squali however said that the report shows Yahoo is capable of increasing efficiency.
"You have to remember, this business is still a melting ice cube," said Squali.
Verizon would likely be reassured by positive user engagement trends revealed in the report, Emarketer analyst Martin Utreras said.
"The concern was really with the user engagement, whether those data breaches would have a material impact," he said. "But basically, from what they released today, it looks like the engagement hasn't changed that much from what they said the previous year."
With primary assets including its 15 percent stake in Chinese e-commerce company Alibaba Group Holding Ltd and a 35.5 percent interest in Yahoo Japan Corp, the Verizon deal would transform Yahoo into a holding company called Altaba.
Compared with a loss of $4.43 billion, or $4.70 per share, a year earlier, the net income attributable to Yahoo was $162 million, or 17 cents per share in the fourth quarter ended Dec. 31.
A $4.46 billion write-down to account for the lower value of some units was included in the year-ago quarter.
According to Thomson Reuters I/B/E/S, Yahoo's revenue rose 15.4 percent to $1.47 billion, above analysts' average estimate of $1.38 billion.
Beating the average estimate of 21 cents, the company earned 25 cents per share, excluding items.
Citing the pending deal, no press conference or webcast after the release of the results would be held, the company said. Yahoo had also not held a post-earnings call in the earlier quarter also.
Verizon is reporting fourth-quarter results on Tuesday before markets open.