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Yahoo Faces Senator Ire on Late Confirmation of Data Breach

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One thing leads to another. Soon after Yahoo! Inc. (YHOO - Free Report) called the massive 2014 hacking incident a “state sponsored” attack without providing any evidence in support of its claim,  it received a letter from six senators, all Democrats, that demands an explanation from CEO Marissa Mayer for  such a  late confirmation of the hacking incident.

The senators include Patrick Leahy of Vermo, Richard Blumenthal of Connecticut, Al Franken of Minnesota, Ron Wyden of Oregon, Edward Markey and Elizabeth Warren of Massachusetts.

The State is not Happy

Lawmakers have called the breach “unacceptable” and stated that they were “disturbed” with the intrusion.  "That means millions of Americans' data may have been compromised for two years," a part of the letter reads. It demands a briefing of the breach to the senators’ staff.

The letter came a day after Democratic Senator Mark Warner had asked the U.S. Securities and Exchange Commission (SEC) to look in to whether Yahoo abided by federal securities laws while informing the public and investors about the data breach.

Too Many Questions Unanswered

Did Yahoo not know about the situation until recently? If yes, then what took it so long to take stock of the situation? Is the company really capable of securing users data? Again, on what basis should one believe Yahoo’s claim of a “state sponsored’ attack?

These are some of the questions that surfaced after the incident came into light. Well, it appears that we will soon get the answers when Yahoo officially responds to the list of questions posed by lawmakers.

A Yahoo spokesman stated that the company’s response will come in a timely and appropriate manner.

YAHOO! INC Price

Will the Verizon Deal be Affected?

Market watchers like us are eagerly waiting to see how all these affect Verizon’s decision to acquire Yahoo’s core assets for $4.8 billion. We believe that the deal could be significantly impacted if Verizon finds a material adverse change (MAC) in the period between signing and closing. 

In response to the breach disclosure, Verizon had stated that "We will evaluate as the investigation continues through the lens of overall Verizon interests, including consumers, customers, shareholders and related communities."

Zacks Rank and Stocks to Consider

Currently, Yahoo is a Zacks Rank #3 (Hold) stock. Better-ranked stocks in the in the broader technology sector include LinkedIn Corporation (LNKD - Free Report) , Autobytel Inc. (ABTL - Free Report) and Yirendai Ltd. (YRD - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Linkedin has seen estimates for the full year rise over the past 60 days by more than 100%. For Autobytel, estimates rose 11.2% in the last 60 days. Over the same period, Yirendai saw its estimates go up by 33.6%.

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