Yahoo results best estimates, but Verizon deal pushed back
SAN FRANCISCO — Yahoo posted surprisingly strong quarterly results Monday, but cautioned the close of its $4.8 billion acquisition by Verizon will be pushed back.
"Given work required to meet closing conditions, the transaction is now expected to close in Q2 of 2017," Yahoo said in a statement, without providing further details. When Verizon announced the agreement in July, it said it expected to finalize the deal in the first quarter of 2017.
Yahoo did not hold a conference call or webcast for the results because of the pending transaction.
The Silicon Valley company registered fourth-quarter profits, excluding items, of 25 cents per share on revenue of $1.47 billion, besting the average analyst expectations of 21 cents on revenue of $1.38 billion.
"What we have achieved reflects some of the most impressive teamwork, focus and resilience I’ve seen throughout my career," Yahoo CEO Marissa Mayer said in a statement. She specifically pointed to nearly $1.5 billion in mobile revenue and more than $750 million in native revenue.
Shares of Yahoo, which reported the results after the close of markets, rose 2% to $43.17 today.
A delay in the closely-watched Verizon deal is the latest to roil investors for what has been an increasingly perilous transaction.
The Securities and Exchange Commission is looking into whether Yahoo should have notified investors sooner about two massive data breaches that involved more than 1 million member accounts, according to a report in the Wall Street Journal.
SEC said to probe Yahoo data breaches
Those breaches have given Verizon executives second and third thoughts, potentially jeopardizing the deal, according to a Bloomberg report.
"I can't sit here today and say with confidence one way or another because we still don't know," Marni Walden, who as president of product innovation and new businesses at Verizon played an instrumental part in the telecom company's planned purchase of Yahoo's Internet business, said this month. She added, however, that the deal made sense.
CFRA analyst Scott Kessler expects the deal to close, but he downgraded Yahoo's stock to "hold" from "buy" before the earnings news. ”YHOO may directly/indirectly indicate the two substantial breaches announced in September 2016 and December 2016 were material,” Kessler wrote in a report.
Nonetheless, Yahoo soldiers on.
This month, it announced in an SEC filing that Mayer and five others will resign from the Yahoo board of directors and the company will be renamed Altaba, paving the way for the completion of the Verizon deal.
Follow USA TODAY San Francisco Bureau Chief Jon Swartz @jswartz on Twitter.