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Yahoo’s Data Breaches Unlikely to Derail Verizon Deal

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  • Yahoo’s Data Breaches Unlikely to Derail Verizon Deal

The second major hack of Yahoo! Inc. user accounts is unlikely to derail Verizon Communications Inc.’s $4.83 billion acquisition of the tech giant, with investors and the public becoming inured to near-daily disclosures of cyberattacks.

Hundreds of U.S. companies fall prey to hackers every year and, in many cases, the data breaches neither hurt bottom lines nor scare away customers for too long. After initial anxieties ease, everyone generally moves on. Experts say the same holds true for Yahoo and Verizon.

“I tend to not feel like these hacks are that big of a deal in the broader scheme of things,” said Michael Mahoney, senior managing director at Falcon Point Capital, which invests in wireless companies. “Obviously they can be damaging. But it doesn’t take too long before people forget about it.”

In the U.S. especially, data breaches continue to mount. Within the past few years, hackers have infiltrated Sony Corp., Target Corp., Home Depot Inc., JPMorgan Chase & Co., auction site EBay Inc. and health insurer Anthem Inc. Almost 1,000 data breaches, including Yahoo’s, occurred in the U.S. just this year, according to the Identity Theft Resource Center. And in all, more than 35 million critical personal records, including social security and passport numbers and medical and banking data, were exposed in 2016.

But Yahoo’s is one of the largest-scale data breaches reported to date. The Sunnyvale, California-based company said that cyber-thieves in 2013 siphoned information from more than 1 billion Yahoo accounts, including users’ e-mail addresses, scrambled account passwords and dates of birth, data that allow criminals to go after more sensitive personal information elsewhere online. It was the second disclosure of a major data breach since Verizon agreed to buy Yahoo. In September, the tech company revealed that more than 500 million users’ data had been hacked in a separate, state-sponsored attack in 2014.

“There are many breaches with many entities that have these types of breaches occurring,” said Eva Casey Velasquez, chief executive officer of the Identity Theft Resource Center.

Since Target’s data breach in 2013, public sentiment has shifted, Velasquez said. “People know what a data breach is. But because it did become so ubiquitous in our conversation, there’s a little bit of apathy.”

And not all breaches are created equal, said Emily Mossburg, a principal at cyber-risk services practice at Deloitte & Touche LLP. Stolen names and account information don’t necessarily have a “broader impact.”

Manageable Costs

Costs of data breaches have been substantial but not devastating. Target and Home Depot estimated that their data breaches resulted in about $200 million each in expenses not covered by insurance. Those are minimal amounts for big companies their size.

And depending on the type of hack and the data stolen, Yahoo’s legal liability may be negligible. Benjamin Dean, president of Iconoclast Tech, a data-security consultant, said Yahoo is unlikely to incur large losses as a result of recent class-action lawsuits.

“The track record for successful class actions relating to stolen non-payment card data isn’t good,” Dean said. “Those bringing the class action typically have to show material damage due to the data lost in a breach — and this has proven difficult to show or prove.”

Still, Yahoo’s costs may be higher simply because of the magnitude of the breach, and may even lead to a loss of users or advertisers. Larry Ponemon, founder of the Ponemon Institute, a think-tank focused on data security, believes Yahoo’s costs — plus opportunities lost — could be $2 to $3 per customer record, and shave $1 billion from the price Verizon pays.

“The timing couldn’t be worse for Yahoo,” he said.

Price Cut

Verizon may be able to negotiate Yahoo’s purchase price down by 5 percent to 10 percent, said Mahoney of Falcon Point, who doesn’t hold shares of either company. Yahoo’s shares are down 5.5 percent since the close Dec. 14, when the company announced the second breach.

Verizon has been buying internet and media companies to drive growth beyond its maturing wireless business by selling advertising. The company purchased Yahoo in part for traffic to its websites like Yahoo Finance, and that traffic is unlikely to decline because of the breach.

According to Alexa Internet, which tracks web viewing, Yahoo fell to the No. 6 most-popular property globally in early December, before the magnitude of the latest breach was revealed, and has held its rank since then. If Yahoo’s numbers remain steady, Verizon should still buy the company, according to Roger Entner, an analyst at Recon Analytics LLC.

“Yahoo has a brand that’s pretty good in the marketplace,” added Mahoney, of Falcon Point Capital. Verizon “will certainly” use the breach as leverage to try to reduce the deal’s price, “but I doubt that it changes the strategic rationale for why they want to buy Yahoo,” he said.

Yahoo said it’s confident in the company’s value and continues to work toward integration with Verizon. Jim Gerace, a spokesman for Verizon, said the company will continue to evaluate the situation before making any final decisions.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Technology

Chinese Smartphone Giant Xiaomi Shares Gains Over 6 Percent After U.S. Agrees to Remove it From Blacklist

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Xiaomi - Investorsking

The U.S. has agreed to remove Xiaomi from a blacklist that would have barred Americans from investing in the Chinese smartphone maker.

Shares of Chinese tech giant Xiaomi rallied as much as 6.5 percent after the news, before paring some gains.

In January, the administration under former President Donald Trump designated Xiaomi as one of several “Communist Chinese military companies” or CCMC.

This meant the world’s third-largest smartphone maker was subject to a November executive order restricting American investors from buying shares or related securities of any companies given this designation by the U.S. Department of Defense (DOD).

Xiaomi brought a legal challenge against the U.S. Department of Defense.

In March, a U.S. court granted Xiaomi a preliminary injunction against the Trump-era order, saying the company would “suffer irreparable harm in the form of serious reputational and unrecoverable economic injuries.”

And on Tuesday, the DOD agreed that a “final order vacating” Xiaomi’s designation as a CCMC “would be appropriate,” according to a court filing.

Xiaomi and the DOD will “negotiate over the specific terms of the order” and provide the court with a “joint proposed order” on or before May 20.

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Telecommunications

Airtel Africa Grows Revenue by 14.2 Percent to $3,908m in Q1 2021

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Airtel Financial Results - Investors King

Airtel Africa Plc, a leading telecommunications company in Africa, grew its revenue by 14.2 percent to $3,908 million in the first quarter (Q1) of 2021, the company stated in its just-released financial statements.

The company reported growth across all its regions with East Africa leading with 23.5 percent growth. Nigeria followed with 21.9 percent growth while Francophone Africa accounted for 10 percent growth. See Airtel Africal financial highlights below.

Airtel Africa Financial Highlights

 Reported revenue grew by 14.2% to $3,908m, with Q4’21 reported revenue growth of 15.4%.
 Constant currency underlying revenue growth was 19.4%, with Q4’21 growth of 21.7%. Growth was recorded across all regions: Nigeria up 21.9%, East Africa up 23.5% and Francophone Africa up 10%; and across key services, with revenues for voice up 11.0%, data up 31.2% and mobile money up 35.5%.
 Underlying EBITDA was $1,792m, up 18.3% in reported currency, and growing 25.2% in constant currency.
 Underlying EBITDA margin was 46.1%, adding 181 basis points(210 basis points higher in constant currency). Underlying EBITDA margin for Q4’21 was 47.7%, an increase of 389 basis points in constant currency.
 Operating profit increased 24.2% to $1,119m in reported currency, and by 32.8% in constant currency.
 Free cash flow was $647m, up 42.8% on the prior year.
 Basic EPS was 9.0 cents, down 12.6%, largely due to prior year exceptional items and a one-off derivative gain. Excluding these, basic restated EPS rose 44.5%. EPS before exceptional items was 8.2 cents.
 Our customer base grew by 6.9% to 118.2 million, with increased penetration across mobile data (customer base up 14.5%) and mobile money services (customer base up 18.5%). The recent slowdown in customer base growth has been due to new SIM registration regulationsin Nigeria.
 The Board has recommended a final dividend of 2.5 cents per share, making the total dividend for FY21 4.0 cents per share.

Commenting on the company’s performance, Raghunath Mandava, chief executive officer, said “In these challenging timesI want to say a huge thank you to all our employees, our business partners, and governments and regulators who have supported us, and in turn facilitated our continued support to the economies and communities we serve.

“Our performance has been strong, with reported growth of 13.6% in underlying revenue and 18.3% in underlying EBITDA, and constant currency growth of 19.4% and 25.2% respectively. Contributions to this growth came across all regions, with particular improvement in Francophone Africa, and across all our major services, with mobile money, data and voice each posting double-digit revenue growth.

“Our customer base also grew strongly for most of the year with new customer registration requirements in Nigeria stemming our onboarding of new customers in the final quarter, and these restrictions were lifted in second half of April.

“In line with our strategy of unlocking value in our mobile money business, we will soon welcome two new minority investors (The Rise Fund and Mastercard) in agreed transactions which value this part of our business at $2.65bn, as well as bringing $300m into the Group. We have also agreed to sell more of our tower portfolio, yielding yet more cash for the business.

“The Covid pandemic had eased during the course of the year, however, more recently we have seen a surge in cases. So far this has had no adverse impact on the business, though we will continue to monitor the situation closely.

“In these times, our purpose of transforming lives has never been more critical. It has always meant more than simply providing mobile and financial services; it is about our drive to create a sustainable future. To that end, this year the leadership team has worked to create our sustainability framework, outlining the role we can play and the focus areas where we can make the biggest difference for each of our business, our people, our community, and our environment.

“We will report back with our goals later this year and deliver our first sustainability report in 2022. The combination of bringing connectivity to underpenetrated mobile markets and improving financial inclusion through banking the unbanked, across our territories of operation, together provide us with a sizeable runway of sustainable profitable growth potential, and one we remain very confident of delivering.”

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Social Media

Facebook Opens Accelerator Programme for Nigeria, Others

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Facebook Accelerator Programme - Investors King

Social media giant, Facebook, has started receiving applications for its Accelerator Programme for this year.

It said it is, therefore, inviting community leaders from Nigeria, South Africa and Kenya to apply for the 2021 Facebook Community Accelerator Programme, a programme that offers participants training, mentorship and up to $50,000 in funds to invest in an initiative that extends their community’s positive impact.

Its Partner Management Lead, Middle East and Africa Community Partnerships, Kiran Yoliswa, said Facebook communities and their leaders are helping to resolve social challenges, sharing knowledge and information, while connecting with others that share their interests or passion for a cause.

We’ve seen so many incredible communities from across South Africa, Kenya and Nigeria using our platform to drive change and provide support and encouragement for thousands of people, we’re excited to offer their Facebook Community leaders this program to help amplify their impact even more,” Yoliswa said, that the aim of the programme is to help leaders of Facebook communities to harness the power of their community to turn ideas into action. The selected leaders will spend five months learning from experts, coaches and a customised curriculum so they can strengthen their community.

Lessons include community identity foundations, leading action-oriented programmes and sustainability. Participants will also receive early access to new Facebook products aimed at helping communities better manage and activate their members.

Participants will identify an important initiative that will create a positive impact on the broader world and develop a plan to mobilise their community around their goal. Initiatives will be shared with potential partners, mentors and a panel of judges for the chance to be awarded funding and receive public recognition.

Participants will then spend three months executing their initiatives. They will collaborate with advocates and leaders in the community space and work with the Facebook team to bring their ideas to life.

Yoliswa said the programme is open to communities that have a presence in Facebook Groups with leaders who are 18 years or older. Communities must have existed for over one year and must have a minimum size of 1,000 members. Applications open today, May 4 – 31, 2021.

The Community Accelerator is part of our Facebook Community Leadership Programme, a global initiative that invests in people building communities.

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