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Yahoo Woes May Cost It $1 Billion

Paul Rubens - October 7, 2016 - 09:31 AM
Yahoo Woes May Cost It $1 Billion
Verizon is hoping to cut the price it ends up paying for Yahoo because of recent hacking and snooping revelations.

(CCM) — Verizon is having second thoughts about its $4.8 billion deal to buy Yahoo and is pushing for a price reduction of as much as $1 billion, according to a New York Post report. The original deal was announced back in July, but since then, Yahoo has announced that at least 500 million of its customers' email accounts have been hacked and that it has been snooping on all of its customers' emails for government agencies, including the National Security Agency (NSA) and the FBI. Verizon had been planning to combine Yahoo with its AOL subsidiary, but a New York Post source said that Tim Armstrong, AOL's chief executive officer, was getting cold feet about the deal. "He's pretty upset about the lack of disclosure and he's saying, 'Can we get out of this or can we reduce the price?'" the source said.

Verizon has reportedly set aside $1 billion as a contingency fund to pay any liabilities that it may inherit from Yahoo's email hack. If the deal does go ahead, AOL and Yahoo will have about 1 billion customers combined, and Verizon has the stated goal of growing this to 2 billion customers by 2020. However, it is likely that many existing Yahoo customers will abandon the service following the hacking and snooping reports. In 2008, Microsoft bid $44.6 billion for Yahoo, but the deal was rejected by Yahoo's management.

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