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Yahoo Q3 earnings beat Wall Street estimates, in wake of imminent merger with Verizon

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Search giant Yahoo, who ‘might’ soon be owned by telecom giant Verizon, today reported its unexpectedly impressive third quarter earnings. The company managed to crush Wall Street estimates even after the confirmation of the massive 2015 hack, and it obliging a request from U.S intelligence officials to scan user e-mails without permission. But, does it really matter at this moment?

For the third quarter, the company posted an earnings per share(EPS) of 20 cents alongwith a revenue of $1.31 billion as compared to analyst estimates of 14 cents earnings per share on $1.31 billion figure for revenues. The revenue figures might be in line with market estimates, but are fairly stagnant when you compare it to previous quarters. This is most likely the primary reason for the search giant to sell its business to a heavyweight like Verizon.

Commenting on the continued growth of the company, CEO Marissa Mayer says,

I am pleased with our Q3 results. This quarter, we launched several new products and showed solid financial performance across the board; both are a testimony to the tremendous teamwork, focus, and resilience of our employees.

In addition, the quarterly financial report also points to the sacrifices made by Yahoo to streamline its business and reduce cashburn. Talking in terms of an yearly basis, the company showed the door to over 2,200 employees which partly led to the reduction of cash expense by approx. $130 million. The cash expenses for the past quarter, ending Spet’16 stands at $629 million while the workforce is still above 8,500.

In the official report, Yahoo also focuses on and reiterates the fact that customers are still engaging with its platform and not abandoning it in the wake of the hack. The engagement, though seems a little steep, has also been fairly constant for an enterprise company of the size of Yahoo. It has shown the metric related to page views and searches on Yahoo’s core verticals — homepage, news, sports, finance; mail messages sent and read.

Credits: Yahoo Investor Relations
Credits: Yahoo Investor Relations

For those unaware, Yahoo is currently in the process of being acquired by telecom giant Verizon for a humongous sum of $4.8 billion. However, the same is currently stuck in no man’s land due to recent revelations connected to the massive hack and relations with U.S intelligence officials. Verizon believes that the repercussions of the breach could be material and thus, it is looking to renegotiate its deal with the search giant. There have recently been reports of Verizon asking for a $1 billion discount on the acquisition deal, but the final results of the same remain unknown.

Commenting on the same, Mayer continues to add,

In addition to our continued efforts to strengthen our business, we are busy preparing for integration with Verizon. We remain very confident, not only in the value of our business, but also in the value Yahoo products bring to our users’ lives.

To that end, we take deep responsibility in protecting our users and the security of their information. We’re working hard to retain their trust and are heartened by their continued loyalty as seen in our user engagement trends.

For the past couple years, Yahoo had been struggling to find its footing and compete with the likes of Google or Facebook — who’re currently dominating the internet. Thus, the company was on the market for a sale of its core businesses and found the right match in the form of Verizon. But this transaction is now also in jeopardy, and can leave the search giant hanging high and dry. If the merger fails(which it probably wouldn’t), it would be a significant blow which isn’t mendable.

A hands-on guy fascinated by new apps, technologies and enterprise products.

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