Verizon CFO: Telco Has Made ‘No Final Conclusions’ About Yahoo in Wake of Massive Security Breach
Verizon CFO Fran Shammo said the company has not “reached any final conclusions” about how to proceed with its planned $4.8 billion takeover of Yahoo, after the internet company disclosed the biggest theft of user data in history last month.
“We are still evaluating what it means for this transaction,” he said, speaking on Verizon’s third-quarter 2016 earnings call Thursday. “This was an extremely large breach that has received a lot of attention.”
Yahoo said last month that information on at least 500 million email accounts — which may have included user names, telephone numbers, dates of birth and hashed passwords — was stolen by “state-sponsored” hackers in 2014. Verizon said that it had only been informed of the scope of the breach two days prior to Yahoo’s Sept. 22 announcement.
On the call, Shammo reiterated comments last week by Verizon general counsel Craig Silliman, who told reporters that the Yahoo breach represented a “material” event. That could open to door to the telco renegotiating the terms of the deal; Verizon has reportedly been seeking to lop some $1 billion off the price tag.
According to Shammo, Verizon’s lawyers had their first call with Yahoo on Wednesday about the security breach. “From what I understand, that’s gong to be a long process,” he said.
Shammo, who helped engineer the Yahoo deal and the $4.4 billion AOL acquisition, won’t be at the table if or when the Yahoo deal closes: He’s set to step down Nov. 1, with finance exec Matt Ellis to take over the CFO spot.
Yahoo CEO Marissa Mayer, in prepared remarks accompanying its Q3 2016 earnings release, didn’t provide any new information on the security breach. She said the company is “busy preparing for integration with Verizon” and that Yahoo remains “very confident, not only in the value of our business, but also in the value Yahoo products bring to our users’ lives.”
Also on the call Thursday, Shammo also touted the progress of Verizon’s Go90, launched a year ago, but didn’t provide details on active user base. According to Verizon, average daily usage of Go90 in Q3 was more than 30 minutes, with just 20% of that traffic delivered over the Verizon network.
Overall, Verizon posted Q3 revenue of $30.9 billion, down 6.7% year-over-year, and falling short of analysts forecasts of $31.1 billion. The company said that excluding Q3 2015 revenue from landline businesses it divested to Frontier Communications, total operating revenue declined 2.9% year over year.
The company’s adjusted third-quarter 2016 earnings per share of $1.01 narrowly topped Wall Street expectations of 99 cents.
In its wireless business, Verizon reported 442,000 retail postpaid net additions for the quarter — missing analyst expectations of 875,000. Total wireless revenue was $22.1 billion, a 3.9% decline versus the third quarter of 2015, which Verizon said was because more customers are choosing unsubsidized-device payment plans.
Verizon’s wireline revenue decreased 2.3%, to $7.8 billion, while revenue for Fios services was up 4.4%, to $2.8 billion. The telco added a net 90,000 Fios Internet connections and 36,000 Fios Video connections in the quarter, after net connection declines in Q2 because of a seven-week strike by unionized workers.
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