Account Information

  • My Account

    Manage all your subscriptions, update your address, email preferences and change your password.

  • Help Center

    Get answers to common service questions, ask the analyst or contact our customer service department.

  • My Stock Talk Profile

    Update your stock talk name and/or picture.


$1,230 in Instant Income?

$1,230 in Instant Income?Our top income expert recently pulled the wraps off his breakthrough moneymaking technique. And he proved beyond a shadow of a doubt how you can use it to generate instant cash payouts of up to $1,230 (or more). Over and over again. But then he took things a big step further and guaranteed you can make $1 million by following his program. And the second he did, our phones went nuts! Space is limited — get the details here.



The Romance Is Over

By Ari Charney on September 30, 2016

You never know what someone is really like until you have to live with them. That can also be the case with mergers and acquisitions, even with all the due diligence that companies perform prior to closing big deals.

This time around, however, circumstances forced Yahoo Inc. (NSDQ: YHOO) to reveal to its prospective suitor, Verizon Communications Inc. (NYSE: VZ), that the troubled Internet pioneer comes with significant baggage, even before the two got to the altar: one of the biggest data breaches in history.

The former search giant recently learned that it was the victim of a massive state-sponsored hack in late 2014, one that compromised 500 million accounts. Conveniently, Yahoo claims to have only discovered the mega-breach after the deal was signed.

Verizon has been hoping to make hay from companies perceived by most consumers as Internet also-rans.

Last year, the telecom giant acquired AOL, a company that had been a punchline for more than a decade, for $4.5 billion. During that time, however, AOL developed two assets that Verizon coveted: exclusive short-form video content that’s perfect for smartphone users and a program that automatically targets ads to those watching mobile video.

In a complementary move, Verizon agreed to purchase Yahoo’s core operations and land holdings in a $4.8 billion deal that was announced in late July. Like AOL, Yahoo was, for a time, one of the dominant Internet portals of the 1990s, but lost the crown to Google and has long since been a punchline too.

But also like AOL, Yahoo has developed original content and ad technology that Verizon covets and intends to combine with similar assets it acquired from AOL.

Although this latest deal could double Verizon’s digital ad sales, the telecom would still have just a 4.4% share of the $187 billion market, ranking it a distant third behind Facebook, which has a 17.2% market share, and Google, which boasts a 35.7% market share.

As the No. 1 wireless company in the U.S., Verizon has nearly 113 million customers. And management believes that the insights the company has into these customers’ habits and locations at any given moment can help deliver the sort of closely targeted advertising that will help it win a greater share of the mobile ad space.

The question now is whether the Yahoo hack changes the firm’s value proposition and, if so, whether Verizon will be able to back out of the deal.

The data breach certainly entails considerable drama, including investigations, regulatory scrutiny, and presumably eventual litigation.

Perhaps more important, the hack could persuade users to abandon Yahoo in droves, even though it occurred nearly two years ago and the company has found no evidence that the state-sponsored actor is still lurking in its network.

For now, most analysts believe the breach will have a limited impact on Yahoo’s valuation and the habits of its more than 1 billion active monthly visitors. The breach mostly targeted email accounts, whose users may not have significant overlap with the audience for Yahoo’s websites that Verizon wants.

For its part, Verizon has understandably remained mostly mum, though clearly it’s working to assess the deal’s viability in light of this news.

A company spokesman told the media, “We will evaluate as the investigation continues through the lens of overall Verizon interests, including consumers, customers, shareholders and related communities. Until then, we are not in position to further comment.”

In order for Verizon to abandon the deal, the “material adverse change” (MAC) clause would have to be triggered. In the merger agreement, a material adverse effect is defined as one that would “reasonably be expected to have a material adverse effect on the business, assets, properties, results of operation or financial condition of the business, taken as a whole.”

Although most analysts believe the hack does not constitute a MAC, one attorney who reviewed the merger agreement told The Wall Street Journal that because Yahoo promised Verizon that no significant breaches had taken place or would take place prior to closing that this could give the telecom leverage to renegotiate or even walk away.

However, other legal analysts noted that it’s rare for MACs to get triggered, and that courts have a very high standard for whether its conditions have been met.

But it’s also exceedingly rare for such breaches to go undetected for so long—the average period from hack to detection is around 150 to 200 days, not nearly two years—and if it’s revealed that Yahoo knew about the breach prior to the agreement, then that would give Verizon another legal escape hatch.

Perhaps we lack the strategic vision that Verizon has of how to put these Internet has-beens to good use, but given the latest news, we’d prefer the telecom to scotch the deal. Unfortunately, it sounds like that would entail a costly legal battle that wouldn’t necessarily achieve its aim.

At the very least, we would like to see Verizon renegotiate the deal. The telecom’s execs are reportedly “livid” about the hack, and one insider says they’ll seek to revise the deal price “at a minimum.”

Hopefully, that conversation is already taking place.

You might also enjoy…


Here’s What’s Really Going to Crush the Market

Most folks understand the basic concept of inflation… things cost more money. But tragically, most don’t understand the real implications of what it means for their financial future. 

Or just how dangerous it’s becoming right now. Today.

And there are two reasons for that…

First, the U.S. government’s calculations barely take into account two of the things you and I are paying more and more for every day: energy and food.

Second, since inflation really hasn’t been an issue for the past 30 years here in the U.S., most analysts won’t dare to say it’s on the rise because they’ll suffer professionally. 

But I’ve made a name for myself by always saying what needs to be said. Which is why I’ve prepared a new special report that’ll give you simple instructions on how to protect yourself from the coming storm.

And better still…

It gives you the full story on the six types of investments that are destined to soar 275%… 375%… even up to 575% over the next few years as the winds of inflation flatten the U.S. economy.

You can get your free copy here.

Stock Talk — Post a comment Comment Guidelines

Our Stock Talk section is reserved for productive dialogue pertaining to the content and portfolio recommendations of this service. We reserve the right to remove any comments we feel do not benefit other readers. If you have a general investment comment not related to this article, please post to our Stock Talk page. If you have a personal question about your subscription or need technical help, please contact our customer service team. And if you have any success stories to share with our analysts, they’re always happy to hear them. Note that we may use your kind words in our promotional materials. Thank you.

You must be logged in to post to Stock Talk OR create an account.

Create a new Investing Daily account

  • - OR -

* Investing Daily will use any information you provide in a manner consistent with our Privacy Policy. Your email address is used for account verification and will remain private.