Yahoo is set to report its third quarter earnings after the markets close on Tuesday. The release comes as Yahoo faces scrutiny over the breach of 500 million users’ account information. But there are questions as to how much the internet company’s earnings report will actually sway investors. Here’s what you need to know before the report comes out:
Yahoo’s GAAP earnings per share (EPS) is expected to report a third-quarter loss of $0.04 per share, compared to a loss of $0.46 per share during the previous quarter, according to a survey of 23 Bloomberg analysts. Another negative EPS would keep Yahoo in the red for the fourth straight quarter. Last year’s third-quarter earnings report yielded $0.08 per share.
Analyst estimates for the adjusted EPS — which excludes certain expenses — are also moving in a positive direction. The average projection of 27 Bloomberg analysts has Yahoo’s adjusted EPS rising to $0.14 per share. That would be an improvement over 2015’s third quarter mark of $0.15 per share.
Analysts expect Yahoo to post a third quarter revenue of $1.31 billion. That would keep revenue at the same level as the previous quarter’s $1.3 billion revenue figure, which was the highest revenue posted of any quarter since Q4 2012. Tuesday’s revenue projection would be an improvement on the same quarter of the previous year, which came in at $1.23 billion.
What to Watch:
Merger & Acquisition: Verizon has agreed to acquire Yahoo’s core business for $4.8 billion, but the deal has not yet been finalized and Yahoo has not had much good news since the deal was announced. Last week Verizon expressed concern over Yahoo’s data breach, calling the event “material” meaning that the two companies may need to renegotiate the terms of the deal.
A positive earnings report could help ease some of the tension and help prove Yahoo’s case that the data breach has not adversely affected their business enough to warrant a prolonged fight over the sale.
Stocks: Yahoo’s stock will begin the day at $42.30. Several analysts are skeptical as to how much impact Tuesday’s earnings report will actually have on the company’s stock price. (Market Analyst) at Pivotal Research Group LLC Brian Wiesler is firmly in that camp.
“It’s not going to matter as much as a normal earnings report would because of all the things that have gone on there over the last month,” said Wiesler.
Yahoo has even elected to skip the analysts’ earnings call for this quarter, citing the ongoing deal with Verizon.