Two massive data breaches seemed to have little effect on Yahoo's fourth-quarter and full-year 2016 financial results, announced after the bell on Monday. But the breaches have effected the impending $4.8 billion sale of Yahoo's core business to Verizon, announced in July. The acquisition will be pushed back from Q1 to Q2, according to The Inquirer.
Yahoo's revenue increased 15.4 percent, growing to $1.47 billion (above analysts' estimates of $1.38 billion), according to estimates from Thomson Reuters. Additionally, quarterly gross mobile revenue grew by 10 percent, to $495 million.
However, analysts warn that despite these numbers, looking deeper into Yahoo's core business, sales continue to drop. The company's EBITDA (earnings before interest, tax, depreciation and amortization), more of an indication of operational performance, dropped nine percent, they said.
Additionally, in October, following the news of a massive breach of Yahoo's databases, Verizon made clear its intention to reevaluate the price it had negotiated to purchase Yahoo's core business. And, that was before news of a second, even larger breach was announced in December.
Further, on Monday, the Securities and Exchanges Commission (SEC) revealed it is investigating the company – looking into the two breaches as well as Yahoo's timing in reporting them.
The result: Verizon's acquisition has now been postponed until the second quarter.
"Yahoo has continued to work with Verizon on integration planning for the sale of its core business," the company announced in a Jan. 23 form 8-k filing. "In terms of timing, Yahoo had previously stated that it expected to close the transaction in Q1. However, given work required to meet closing conditions, the transaction is now expected to close in Q2 of 2017. The company is working expeditiously to close the transaction as soon as practicable in Q2."
Yahoo announced it will rebrand itself under the name Altaba, once it unloads its portal to Verizon. The company's CEO, Marissa Mayer, will leave the company as part of the deal, albeit with a $55 million pay-off.
Verizon has not yet publicly disclosed whether it will seek to renegotiate the terms of its acquisition of Yahoo.
Gunter Ollmann, CSO at Vectra Networks, told SC Media on Tuesday that the breaches almost certainly will affect the impending sale of Yahoo. "As seen in the case of Yahoo!, businesses that lack transparency and willingness to discuss security matters in an honest and open way will see significant impact on the bottom line, and along with it their market value and reputation."
Security is a strategic issue and needs to be included as part of any M&A due diligence, he added. "Likewise cyberattacks offer the opportunity for motivated external parties to damage M&A target organizations' reputation and thus market value."
It's a certainty that Chandra McMahon, CISO at Verizon Communications, is studying the security operations of the acquisition target.