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Yahoo's Hacking Issues May Hinder Verizon Takeover

First Posted: Oct 19, 2016 06:00 AM EDT
NEW YORK, NY - JULY 25: Free charging stations are seen in Verizon Plaza outside the Verizon headquarters building on July 25, 2016 in New York City. Verizon Communications has announced it is buying Yahoo's core businesses for $4.83 billion but recent hacking issues have put the deal in jeopardy.<br />
NEW YORK, NY - JULY 25: Free charging stations are seen in Verizon Plaza outside the Verizon headquarters building on July 25, 2016 in New York City. Verizon Communications has announced it is buying Yahoo's core businesses for $4.83 billion but recent hacking issues have put the deal in jeopardy.

(Photo by Kena Betancur/Getty Imag)

The recent disclosure of a huge data breach may affect Verizon Communication's acquisition of Yahoo for $4.8 billion.

Last month, Yahoo revealed that a massive hack had affected around 500 million of its users. In its aftermath, Yahoo president and CEO Marissa Mayer and her team drew scrutiny over the unfortunate incident, which CNET says may be the biggest hack and theft of personal account info to date. Yahoo has also been criticized for allegedly helping the U.S. government spy on its users in a bid to track down criminals and terrorists.

According to reports, Verizon general manager Craig Siliman said that the company is evaluating the impact of the security breach. Many believe it could have a "material impact" on negotiations for Verizon's takeover of the multinational tech company.

But a significant increase in Yahoo's profits may help swing things back in the company's favor. On Tuesday, Oct. 18, Yahoo released its third quarter 2016 financial report, which indicated profits exceeding Wall Street's expectations. Based on the report, Yahoo's profits grew by more than double in the last three months, rising to $163 million from $76.3 million in the same period last year. Revenues are up 6.5% to $1.3 billion and shares are up less than 1% to $41.95 in after-hours trading.

Revenues from mobile operations alone grew from $271 million in the same quarter last year to $396 million this year.

This was the first financial update from Yahoo since the deal between the tech giant and Verizon was announced.

"We remain very confident, not only in the value of our business, but also in the value Yahoo products bring to our users' lives," Mayer said in a statement.

The Yahoo chief executive also addressed the recent security breach, saying: "We take deep responsibility in protecting our users and the security of their information. We're working hard to retain their trust and are heartened by their continued loyalty as seen in our user engagement trends."

CNET reports that Yahoo has decided, for the first time, to skip its regular analysts call, which is standard operating procedure for public companies following the announcement of quarterly financial reports. According to a Yahoo spokesperson, the call was cancelled due to the impending sale to Verizon.

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