SAN FRANCISCO Yahoo Inc (YHOO.O) reported better-than-expected quarterly adjusted profit on Tuesday, a boost for the beleaguered company whose deal to sell its core business to Verizon Communications Inc (VZ.N) has been shaken by a massive data breach.Verizon's general counsel said last week that the hack, which affected at least 500 million email accounts in 2014, could have a material impact, possibly allowing Verizon to withdraw from the $4.83 billion deal.Tuesday's results provided at least an initial indication that the data breach has not led to a quick exodus of Yahoo customers, as some had feared. Customer trends showed growth in pageviews and email usage, Yahoo said.Another positive sign for Yahoo was that revenue from Mavens - the mobile, video, native and social advertising units that Chief Executive Marissa Mayer touts as its emerging businesses - rose 24.2 percent to $524 million.Still, the business showed continuing declines in major revenue categories. Gross search revenue fell 14.1 percent to $752.5 million. Total revenue rose 6.5 percent to $1.31 billion, beating the average analyst estimate of $1.30 billion, according to Thomson Reuters I/B/E/S. But after deducting fees paid to partner websites, revenue fell to $857.7 million from $1 billion.
Yahoo said on Friday it would not hold a call or webcast after the release of the results, citing the Verizon deal.Analysts at Needham & Co said in a note on Tuesday that decision troubled them, given the doubt cast over the Verizon deal by the data hack, as they cut their rating on Yahoo to 'hold' from 'buy'. Yahoo's shares were up about 1.4 percent in extended trading after the close on Tuesday.
For the third quarter ended Sept. 30, net income attributable to Yahoo rose to $162.8 million, or 17 cents per share, from $76.3 million, or 8 cents per share, a year earlier. Excluding some items, the company earned 20 cents per share, beating analysts' average estimate of 14 cents.
Verizon plans to combine Yahoo's search, email and messenger assets as well as advertising technology tools with its AOL unit, which it bought last year for $4.4 billion.The deal would transform Yahoo into a holding company, with a 15 percent stake in Chinese e-commerce company Alibaba Group Holding Ltd (BABA.N) and a 35.5 percent interest in Yahoo Japan Corp (4689.T) as well as Yahoo's convertible notes, certain minority investments and its non-core patents.The deal is expected to close in early 2017, after which Yahoo plans to change its name and become a publicly traded investment company. (Reporting by Anya George Tharakan in Bengaluru; Editing by Don Sebastian, Jonathan Weber and Bill Rigby)
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Updated Date: Oct 19, 2016 03:15 AM