Yahoo Inc on Monday said that its US$4.8 billion deal to sell its core Internet assets to US telecom titan Verizon has been delayed for several months.
The closing that was set for this quarter has been pushed into next quarter due to “work required to meet closing conditions,” the California online pioneer said in a statement, adding that it was “working expeditiously to close the transaction as soon as practicable.”
The news came in an earnings release showing Yahoo swung to a profit of US$162 million in the final three months of last year.
The deal with Verizon, which would end Yahoo’s run of more than 20 years as an independent company, has been thrown into doubt following disclosures of two huge data breaches.
Yahoo said it is ramping up security as it grapples with the aftermath of the hacks.
“Our top priority continues to be enhancing security for our users,” Yahoo chief executive Marissa Mayer said.
Mayer said that “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.”
Yahoo boasted having more than 1 billion users monthly last year, with more than 650 million of those people connecting from mobile devices.
The US Securities and Exchange Commission has opened an investigation into whether Yahoo should have informed investors sooner about two major data breaches, the Wall Street Journal reported on Sunday, citing people familiar with the matter.
US law requires companies that fall victim to such hacks to disclose them as soon as they are deemed to affect stock prices.
Yahoo in September last year announced that hackers in 2014 stole personal data from more than 500 million of its user accounts.
It said last month that there was another cyberattack, this one dating from 2013, affecting more than 1 billion users.
The commission’s investigation is focusing on why it took Yahoo several years to reveal the 2013 and 2014 attacks.
The data breaches have been a major embarrassment for a former Internet leader that has failed to keep up with Google, Facebook and other rising stars.
The cyberattacks, and how notifying users was handled, has also raised concerns by investors that Verizon might seek to pay a lower price for Yahoo or even back out of the deal.
When companies are in the process of being acquired, earnings that hit or surpass targets typically do not knock matters off course.
“The bigger things are the breaches; those have Verizon reconsidering the deal,” analyst Rob Enderle of Enderle Group told reporters. “I think the merger is at risk; the delay would point to that as still a possibility.”
The earnings report showed Yahoo swung to profit a year after a massive US$4.4 billion loss in the same period a year earlier, resulting from a large writedown on the value of its holdings.
Revenue in the fourth quarter rose to US$1.47 billion from US$1.27 billion a year earlier.
Yahoo reported a loss of US$214 million for the full year on revenue that inched up to US$5.2 billion from US$5 billion in 2015, according to the earnings report.
Mayer has been driving a shift to mobile, video, social and native advertising offerings at Yahoo, and revenue in those areas — which she dubbed “Mavens,” continued to climb.
Mavens revenue for last year slightly topped US$2 billion, compared with $1.7 billion in 2015.
“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.
Yahoo shares were up a little more than 1 percent to US$42.88 in after-market trades that followed release of the earnings figures, which topped Wall Street expectations.
Mayer is to quit the company’s board after its merger with Verizon, according to an filing by the commission, though she is expected to remain with the core Yahoo business.
Yahoo is selling its main operating business as a way to separate that from its more valuable stake in Chinese Internet giant Alibaba (阿里巴巴).
The share-tending entity, to be renamed Altaba Inc, is to act as an investment company.
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