Standard & Poor’s: Yahoo! Inc. unsolicited outlook revised to negative
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CAIRO: Standard & Poor’s Ratings Services said today that it revised its unsolicited rating outlook on Sunnyvale, Calif.-based Internet company Yahoo! Inc. to negative from stable. At the sametime, we affirmed our unsolicited ‘BB+’ corporate credit rating on the

company.

We also affirmed our unsolicited ‘BB+’ issue-level rating on the company’s $1.25 billion convertible notes due 2018. The unsolicited ‘3’ recovery rating is unchanged, indicating expectation for meaningful recovery (50%-70%; upper

half of the range) of principal in the event of a payment default.

 

“The revised rating outlook reflects our expectation that Yahoo’s performance will remain week over the next 12 months, primarily due low revenue growth and rising traffic acquisition cost,” said Standard & Poor’s credit analyst Elton

Cerda.

We could lower our rating on Yahoo if the company’s competitiveness in its display or search advertising businesses continues to decline and it is not able to reverse the negative operating trends affecting EBITDA. A near double-digit percentage decline in revenue, excluding traffic acquisition costs, could indicate a worsening competitive position. Additionally, we could lower the rating if Yahoo pursues large debt-financed, shareholder-oriented initiatives or acquisitions.

We could revise the outlook to stable if Yahoo develops and effectively implements a business plan in which it would maintain its market share, improve the monetization of its portfolio, and stem EBITDA declines. Additionally, an outlook revision to stable would entail Yahoo converting the improvement in its user engagement into revenue growth and meaningful market share gains in search and display advertising.

The preceding was a statement by Standard & Poor’s and does not reflect the editorial policy of The Cairo Post.

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