Reportedly, the Yahoo! ad network fell prey to a security breach that infected thousands of Yahoo.com  (YHOO) accounts with malicious software.

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Malicious software is used to disrupt computer operations, gather sensitive information, or gain access to private computer systems. It can appear in the form of code, scripts, active content, and other software. It often steals user names and passwords and can also disable antivirus software.

The concept of “malvertising” is pretty different from that of “hacking” in the sense that the latter preys on users who download malicious software while the former can infect users even if they simply click or view an ad.

Yahoo, however, remained silent on the number of users who were affected by this malware attack and the forces responsible for it.

Yahoo is not the only company to have fallen victim to the practice of malvertising, but it is the largest so far.  In fact, the practice of malvertising drove two of the largest ad network operators, Google (GOOG) andMicrosoft (MSFT) to take precautionary measures in recent years.

Yahoo’s search business has shown signs of improvement, even in the face of tough competition fromFacebook (FB), Google and Microsoft. Currently, Yahoo has a huge task at hand, which is to retain and add to its user base and make them spend more time on its properties. This would play an important role in bringing back advertisers as well.

However, inability to protect user information could damage its reputation and credibility, thus slowing down financial growth and pulling down stock prices in the process.

Currently, Yahoo has a Zacks Rank #4 (Sell).

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