The long-awaited sale of Verizon’s data centers is about to happen. In fact, if you take “fourth quarter” literally, it could be announced any day now.
“We are currently in negotiations, and we should have something to formally announce to everyone early in the fourth quarter,” Verizon CFO Fran Shammo said this morning, during the carrier’s third-quarter earnings call.
Shammo further confirmed that data-center negotiations are with one entity.
It’s been assumed for some time that Verizon will sell its 48 data centers, acquired with the $1.4 billion purchase of Terremark in 2011. It doesn’t mean Verizon is giving up on data centers entirely; in fact, the carrier is still adding data centers to its telco cloud.
But the idea of offering public-cloud services to compete with Amazon Web Services (AWS) has lost its luster, not just with Verizon but with vendors such as Hewlett Packard Enterprise (HPE) and VMware. Last year, Shammo was steadfast about Verizon keeping its data centers, but by January, Verizon was clearly ready to sell.
The Cost of Yahoo
Separately, Shammo was asked about the impact of the Yahoo security breach in which 500 million accounts were compromised in 2014. The breach was disclosed just last month after Verizon had put up its $4.8 billion offer to acquire Yahoo.
Shammo didn’t have specific new information to share, but he did note that given the publicity around the breach, “we have to assume this will have a material impact on Yahoo.”
Verizon is still in the early stages of evaluating the damage.
“Lawyers had their first call yesterday with Yahoo to provide us information, but from what I understand, that’s going to be a long process,” he said. “We haven’t reached any final conclusions around this issue.”
Running the Numbers
Verizon reported third-quarter revenues of $30.9 billion, down from $33.2 billion the previous year.
Verizon’s net income was $3.7 billion, or 89 cents per share, down from $4.2 billion, or 99 cents per share, a year ago.
Non-GAAP net income of $1.10 per share beat the analysts’ estimate of 99 cents, according to Thomson Reuters.
Incoming CFO Matt Ellis (today was the final earnings call for Shammo, who is retiring) said the company aims to return to growth in 2017, roughly matching the growth of GDP.
Among the expected contributors to that growth would be the Internet of Things (IoT), which represented $217 million in revenues during the quarter, up 30 percent from the previous year. Verizon highlighted the three recent acquisitions it’s announced in this area: Telogis (a telematics company, acquired in July), Fleetmatics (a $2.4 billion deal expected to close in the fourth quarter), and Sensity (a smart-city deal that closed this month).
Photo: Scott Webb, via Pexels.