Published Tuesday, Jan. 24, 2017 4:04PM EST
Last updated Tuesday, Jan. 24, 2017 4:04PM EST
Yahoo Inc. said the sale of its main web operations to Verizon Communications Inc. has been delayed until next quarter to meet closing conditions while the company recovers from the disclosure of massive hacks to its user accounts.
The company said late Monday it’s “working expeditiously” to finish the deal as soon as practical. Yahoo had expected the agreement to be completed in the current period. The web portal also reported fourth-quarter revenue that topped analysts’ estimates and user activity that showed minimal declines after the announcement last month of a second major security breach.
Chief executive officer Marissa Mayer is under pressure to conclude the deal with the telecommunications giant following the revelation of massive hacks, most recently in December when Yahoo said as many as 1 billion user accounts may have been compromised. Verizon is exploring a price cut or possible exit from the pending acquisition that was valued at $4.83-billion (U.S.) when it was announced in July, a person familiar with the matter said in December.
“We continue to believe Yahoo remains attractive to Verizon,” Kunal Madhukar, an analyst with SunTrust Robinson Humphrey, said in a note Tuesday. If user engagement has indeed remained consistent through the hacks, “Verizon may not consider the impact to be material.”
Verizon declined to comment on the new time frame for the deal.
“Yahoo has been an interesting process,” said Verizon chief financial officer Matt Ellis in an interview Tuesday. “There’s been good progress, but we are still awaiting the final reports and therefore we haven’t reached any conclusions yet.”
Shares of Yahoo rose 3.1 per cent to $43.71 at 11:20 a.m. in New York. Much of Yahoo’s value is tied to its stake with Alibaba Group Holding Ltd., which was up 2.4 per cent following earnings on Tuesday. The stake is not part of the Verizon deal.
Yahoo reported sales, excluding revenue passed on to partners for web traffic, of $960-million, topping analysts’ estimates of $907.9-million, according to data compiled by Bloomberg. Profit, before certain items, was 25 cents a share. Analysts projected 21 cents.