Yahoo is scheduled to release its fourth quarter earnings report tonight after closing bell, although the results are not all that important, given Verizon’s pending acquisition of the company’s core internet assets. As a result, the basic numbers are just a formality, and investors and analysts will be more interested in other issues, such as progress on the Verizon deal.
Another area of interest will be any new disclosures on the last data breach and whether that breach impacted the number of active users.
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What to expect in Yahoo’s earnings report
Analysts are looking for 11 cents per share in net earnings and 21 cents per share in adjusted earnings. In the same quarter a year ago, the company reported GAAP losses of $4.70 per share on the back of a $4.5 billion impairment charge. After adjusting for the charge, profits came in at 13 cents per share, however.
For revenue, analysts are expecting Yahoo to report $1.38 billion or $908 million including traffic acquisition costs. In the year-ago quarter, the internet firm reported $1.27 billion in revenue or $1 billion after including traffic acquisition costs.
Eyes on Verizon, Altaba
Yahoo announced in a regulatory filing earlier this month that after the deal with Verizon is complete, it will change its name to Altaba. Verizon will retain the Yahoo internet brand, and it’s expected that the brand will be kept alive because there is still some value in it, although the value has been diminished greatly over the years.
It’s unclear exactly where the name Altaba came from, although it’s believed to originate from the combination of the word “alternate” with “Alibaba.” What’s left of Yahoo will become a holding company for its stakes in Yahoo Japan, Alibaba and a few other assets. Yahoo CEO Marissa Mayer will depart when the transaction closes, along with several other top executives.
Will the data breaches push Verizon away?
Verizon had already agreed to pay $4.8 billion for Yahoo’s core internet assets before two huge data breaches were disclosed. Debates have centered around whether the terms of the deal with Verizon will change based on that new information. The mobile carrier and internet service provider could walk away entirely, depending on whether the data breaches are considered “material” enough for Verizon to reduce its bid or ditch it completely.
It’s unclear whether Yahoo will release any new information on the Verizon deal with tonight’s earnings report, but investors will be digging into the release closely for any clues, whether overt or covert in nature. Yahoo will not hold an earnings call tonight because of the pending deal. Earlier this month, a Verizon executive said they didn’t know yet if the transaction would be completed.
Last month the internet firm said it encountered a huge data breach in 2013 that impacted more than 1 billion users. That breach was twice as big as the one that occurred in 2014, which was disclosed in September. Verizon, investors and analysts will also be closely watching Yahoo’s fourth quarter user numbers to see whether users abandoned the platform entirely out of concerns about their information due to the huge data breaches.
It seems unlikely there will be much of an earnings-related change in Yahoo shares tonight—unless the company shows a huge decline in users or reports that Verizon has terminated the deal. The stock declined by as much as 0.11% to $42 during regular trading hours today.