Yahoo is said to have secretly built a software program in 2015 to search all of its customers' incoming emails for U.S. intelligence, Reuters reported Tuesday. The company has challenged the report.
The company also confirmed in late September that over 500 million of its accounts had been breached in 2014 by a state-sponsored hacker. The company learned of the breach in July, according to a Washington Post report.
All of that is very bad news for a company set to be purchased by Verizon (VZ) for roughly $4.83 billion.
"If I were [Verizon], just from a business standpoint, I would probably reserve a bunch of money against the deal or go back to Yahoo and ask for a discount," former Yahoo interim CEO Ross Levinsohn said on CNBC's "Halftime Report" Wednesday. "Now if they do that, the question I have is: Does that open the process back up?"
Levinsohn served as CEO of Yahoo from May 2012 to July 2012 before Marissa Mayer took his place.
"I think it's troubling," Levinsohn said of the data breach. "It certainly was not something that was disclosed to my knowledge, the hack. It's likely something that the company knew about."
Shares of Yahoo were slightly higher in Wednesday afternoon trading.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate YAHOO INC as a Hold with a ratings score of C. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share.
You can view the full analysis from the report here: YHOO