You are here

Yahoo rakes in profits as it prepares for Verizon deal

Wednesday, October 19, 2016 - 07:00
40100233 - 06_10_2016 - FILES-US-INTELLIGENCE-IT-YAHOO.jpg
Yahoo's quarterly profits shot up by more than double to US$163 million even as it prepares for a takeover by Verizon.

[SAN FRANCISCO] Yahoo's quarterly profits shot up by more than double to US$163 million even as it prepares for a takeover by Verizon.

"We remain very confident, not only in the value of our business, but also in the value Yahoo products bring to our users' lives," the company's chief executive Marissa Mayer said in the earnings release, which beat expectations despite only a slight rise in revenue.

Yahoo skipped its usual quarterly earnings call with analysts due to the pending takeover by the US telecommunication company, for which Ms Mayer said Yahoo is busy preparing despite recent revelations about a major data breach that may affect the deal.

Shares were up 1.3 per cent to US$42.22 in after-market trades following the earnings report release, reflecting confidence the breach is not prompting a significant number of users to abandon Yahoo.

Revenue for the quarter that ended on Sept 30 came to US$1.3 billion, up from the US$1.2 billion in the same period a year earlier.

Mobile revenue during the quarter reached US$396 million, up from US$271 million the previous year.

"We launched several new products and showed solid financial performance across the board," Ms Mayer said.

The internet pioneer agreed in July to sell its core assets to Verizon for US$4.8 billion, ending a 20-year run as an independent company.

The deal would separate the Yahoo internet assets from its more valuable stake in the Chinese online giant Alibaba.

However, Verizon said last week that a recently revealed hack affecting 500 million Yahoo customers worldwide could have a "material" effect on the US$4.8 billion deal.

The comments from Verizon general counsel Craig Silliman suggest the telecom company could seek to reduce the purchase price or walk away from the deal.

Although the hack took place in late 2014, Yahoo announced it only last month, dealing the faded internet star a fresh blow.

The attack was probably "state sponsored" the company said, although some analysts have questioned the source.

"We're working hard to retain their trust," Ms Mayer said of Yahoo's users, "and are heartened by their continued loyalty as seen in our user engagement trends".

The beleaguered company has made several attempts to refocus after falling behind Google and Facebook in key segments of online advertising.

AFP