Sunday 24 September 2017

Yahoo chief Mayer targets strong finish before takeover by Verizon in €4.5bn deal

Marissa Mayer pushed Yahoo into more mobile services and tried to attract better talent
Marissa Mayer pushed Yahoo into more mobile services and tried to attract better talent

Brian Womack

In its final months as a standalone company, Yahoo is showing signs it can move toward growth.

Yahoo made progress in its last quarterly earnings report before the sale of its main internet operations to Verizon Communications, posting adjusted revenue and profit that topped analysts' estimates. The web portal, which had said the Verizon deal would close in the current quarter, on Tuesday narrowed the time frame to June.

The sale, which comes after CEO Marissa Mayer's tumultuous tenure leading Yahoo, was threatened by two massive hacks that exposed user account data.

The companies agreed to reduce the value of the deal by about $350m (€326m) in February to about $4.5bn (€4bn) after the telecommunications giant had earlier suggested concessions closer to $1bn (€932m).

"As we enter our final quarter as an independent company, we are committed to finishing strong and planning for the best possible integration with Verizon," Mayer said in a statement on the results.

Revenue, excluding sales passed on to partners, was $833.8m (€776m), compared with analysts' average estimate of $814m (€776m), according to data compiled Bloomberg. Profit, before certain items, was 18 cents a share. Analysts projected 14 cents.

Before Tuesday's announcement, the company had failed to meet estimates for revenue and adjusted earnings in four of the last nine quarterly reports.

Shares of Yahoo were little changed in extended trading after closing at $47.56 in New York.

Mayer, who arrived in July 2012 from Google to fanfare, pushed Yahoo into more mobile services and tried to attract better talent to improve products. But that never translated into much sales growth - and early last year the company began entertaining offers that led to the Verizon deal.

In September, investors got a surprise when Yahoo said the personal information from at least 500 million user accounts had been stolen in 2014. An attack that breached the security of more than 1 billion user accounts in 2013 was revealed in December.

By last month, the company said its general counsel was resigning, and Mayer's compensation was trimmed. Later in March, the US government accused Russia of directing some of the world's most notorious cybercriminals to break into the web portal's systems.

The acquisition offers some interesting assets for Verizon.

It gets a large, mature, consumer internet service with hundreds of millions of users in areas such as video, email, news and search. The operations will become part of a unit called Oath that includes Verizon's earlier acquisition of AOL, another web portal that rose to prominence in the 1990s.

Mayer's focus on mobile revenue from smartphones and tablets showed positive results in the first quarter, increasing 58pc to $412m (€384m), the company said.

What remains are the most valuable parts of Yahoo's current company: the stakes in Alibaba Group Holding Inc. and Yahoo Japan that are worth more than $40bn (€37bn).

Those holdings will become part of a new company called Altaba, and will be led by CEO Thomas McInerney, a current Yahoo board member. (Bloomberg)

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