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Yahoo turns a profit, but Verizon deal could be in jeopardy

Despite the news of its recent hack, Yahoo Inc reported quarterly adjusted profits on Tuesday that beat Wall Street's expectations. The news comes as a surprise as the company has been dealing with the backlash of a recent data breach (opens in new tab) that exposed at least 500 million email accounts.

Verizon had agreed to acquire Yahoo for $4.83 billion before the hack was made public and now it appears as though the deal could be affected by the breach which was kept under wraps for two years. Last week, the mobile carrier's general counsel confirmed that the breach could prevent the acquisition (opens in new tab) from happening as it may use it pull out from the deal.

The results that Yahoo announced on Tuesday though show that the data breach has not yet caused the company to lose its large customer base. In fact the company's site has seen an increase in both email usage and the amount of times its website has been viewed.

Analysts remain undecided as to whether or not Yahoo's deal with Verizon will be called off as a result of the breach. Before disclosing the breach, the company said that it was unaware of any risks to its business online in a filing with securities regulators. This statement raises further questions as to whether Verizon was informed of the hack and still decided to go through with the deal, or if it was completely in the dark.

Ronald Josey, an analyst at JMP Securities, pointed out that an up-tick in usage is good news for Yahoo, saying: “The message here is email and messaging is a very sticky product and people want to get to their messages.” However, increased use of the company's services could have come as the result of millions of users trying to see if their accounts had been breached which would make Yahoo's messaging services worth a great deal less.

The company also saw increased revenue from Mavens which serves as its platform for mobile, video, native and social advertising, rising by 24.2 per cent to $524 million.  Yahoo's CEO Marissa Mayer has referred to this new unit as its emerging businesses.

The company's total revenues rose by 6.5 per cent to $1.31 billion which was slightly higher than the $1.30 billion that analysts had previously estimated. However, Yahoo's gross search revenue fell by 14.1 per cent to $752.5 million. 

Image Credit: Ken Wolter / Shutterstock

After getting his start at ITProPortal and then working with the TechRadar Pro team for the last several years, Anthony is now the security and networking editor at Tom’s Guide where he covers everything from data breaches to how to cover your whole home or business with Wi-Fi. When not writing, you can find him tinkering with PCs and game consoles, managing cables and upgrading his smart home.