YHOO Stock: Yahoo Reports Earnings, Delays Closing Verizon Deal

Yahoo YHOO Stock

Yahoo! Inc. (NASDAQ:YHOO) stock gained $0.44 to $42.84 in after-hours trading Monday after it reported 2016 fiscal-fourth quarter earnings.

The Sunnyvale, California-based tech company handed in earnings of $0.25 per share on revenue of $960 million, beating Wall Street estimates of $0.21 per share on revenue of $907.72 million.

Though display ad prices declined 5% on a year-over-year basis, Yahoo exceeded expectations when it comes to display revenue, bringing in $573 million, above the $568 million expected. GAAP search revenue hit $767 million in Q416 compared to $528 million, and came in above the $699 million estimates. Search ad revenue on the other hand declined by 5%, as the number of ads sold and the price-per-click of search ads rose by 4% and 18% respectively, but the price per advertisement declined by 10%.

CEO Marissa Mayer said she was “very pleased” with the results and “incredibly proud of the team’s execution…particularly given the uniquely eventful past year for Yahoo.”

Mayer also said results were “ahead of plan,” highlighting nearly $1.5 billion in mobile revenue and over $750 million in native revenue.

Despite better-than-expected results, Yahoo said it has delayed closing its deal with Verizon Communications Inc. (NYSE:VZ). The web portal pointed out that it is working expeditiously to close its acquisition by New York-based Verizon as soon as practicable in Q2 of this year.

In July, the wireless provider agreed to acquire Yahoo’s core businesses, saying it expected the $4.8 billion deal to close in the first quarter of 2017. But since then, the disclosure of two data breaches of unprecedented size have cast a shadow over the deal.

The SEC is investigating whether Yahoo’s massive hacks, which occurred in 2013 and 2014 compromising hundreds of millions of users, should have been exposed to shareholders sooner, according to The Journal.

CEO Marissa Mayer did not directly address or confirm the investigation in the earnings release, but did say in a statement that Yahoo’s commitment to the security of its users is “unwavering”.

Meanwhile, illustrating the importance of Yahoo’s Verizon acquisition, CFRA Research analyst Scott Kessler this afternoon downgraded his rating on Yahoo stock to ‘Hold’ from ‘Buy’, citing uncertainty around the pending deal. Kessler sees more bad news coming from two massive data breaches.

Stock Action

YHOO shares have advanced 8.27% in the last 4 weeks and less than one percent in the past three months. Over the past 5 trading sessions the stock has gained 0.31%.

The $41 billion market cap company has a median Street price target of $47.00 with a high target of $55.00.

Yahoo is up 42.52% year-over-year, compared with a gain of 21% in the S&P 500.

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