Sizzle Fizzle: Déjà Yahoo All Over Again

What’s hitting – and missing this week?  We’ve got it all here.

SIZZLE
Bank Stocks: The Fed rate hike is finally in, and that’s likely a good sign for banks (and their stocks). By boosting the Fed funds rate for the first time in a year, all sorts of attendant interest rates are going to be on the upswing, from mortgage rates to auto loans to — well — vanilla, standard loans and credit card rates. The impact may be longer term in nature, but the benefits will accrue to banks’ bottom lines. And where earnings show gains, often so do stocks, which have already been sizzling.

Amazon: A slew of headlines this past week point to Amazon as a true growth company, size and scale notwithstanding. We’ve chronicled Amazon Go, which when the Go gets going, could help reinvent groceries, and might have a deleterious effect on brick and mortar locations. Radial data released this week shows that in terms of overall retail online, there’s some opportunity to gain eyeballs and clicks — among less frequent Amazon shoppers. But better act fast. The same survey found that among Amazon shoppers, 95 percent describe the online retailer as “trustworthy.” And trust goes a long way toward cementing consumer stickiness.

India’s Cashless Payments: Could there be a silver lining in the currency snafus that have bedeviled India, as roughly 86 percent of paper bills were taken out of circulation and chaos ensued, with lines at ATMs and bartering back in style? Two words: Cashless payments. Paytm has said that as many as 70,000 merchants are signing up for its mobile payments platform, roughly 14 times what had been anticipated before the currency ban. And India’s central bank has said that cashless payments in the first nine days of December alone stood at 358,000 transactions, outpacing the 287,000 transactions seen in the entire month of November – a sizzling pace.

FIZZLE
Venezuela: It’s been a study of what not to do when introducing a new currency. Make sure it’s available when it needs to be — at this writing, banks did not have the notes in hand, even as the deadline to have them loomed. And amid the introduction of new, higher denomination bills to replace the 100-bolivar currency that has left circulation, hyperinflation continues apace.

Retail Sales: Admittedly a lone data point, but after three months of strong gains of as much as half a percent, retail sales showed a rather sluggish pace for November. As in, eking out a gain of only 10 basis points. Maybe a blip, but also maybe concerning headed into the holiday shopping season in earnest.

ThyssenKrupp: Think cyberattacks are the bane of only retailers and high tech companies? Think again. The German steelmaker disclosed that technical trade secrets were pilfered in what amounted to a “massive cyber-attack” undertaken by Southeast Asia-based hackers. Project data was taken from engineering and other divisions. Old school target, new world (hacking) dangers.

FIZZLE of the Week: Yahoo

There are fizzles, and there are fizzles.

And then there’s the news out of Yahoo this week, and a billion customers’ data going right out the door.

No, you aren’t experiencing déjà vu all over again — as it turns out, that breach of over 500 million Yahoo accounts from 2014 announced in September was more the opening act than the main event.

As of Wednesday, Yahoo had officially announced that things were much, much worse than one might have thought — as a new cybersecurity breach has managed to release the personal data of over 1 billion users. To put those numbers in some context, that means that on the planet Earth there are roughly ten times more people who have been breached through Yahoo than there are red heads.

The new breach is not a totally separate animal from the old one — according to information released by Yahoo, the current breach seems to have some connection to the same state-sponsored actor the company believes is responsible for the data theft back in September — though the matter is still under investigation.

Good News/ Bad News

The good news — such as there is any in a billion account breach — is that it seems payment data did not manage to go out the door. The bad news: thieves got just about anything else they could ever want or need to hack victims even more later — and perhaps turn up some of that payment card data.

“The stolen user account information may have included names, email addresses, telephone numbers, dates of birth, hashed passwords (using MD5) and, in some cases, encrypted or unencrypted security questions and answers. We have invalidated unencrypted security questions and answers so that they cannot be used to access an account,” wrote Bob Lord, chief information security officer at Yahoo, in a blog post announcement.

The breach discovery is new, but it is in fact a bit older than the breach discovered in September — this attack seems to have been carried out against Yahoo customers during 2013. If the billion-user figure holds up, this will be the biggest data breach of the digital era.

So Now What?

Yahoo stated that it has taken measures to secure user accounts and is currently working with law enforcement in an investigation.

Of critical interest: figuring out how the data from the 1 billion accounts was stolen, since that remains something of a mystery.

Yahoo is notifying all the users affected and asking them to change their passwords.

How comforting.

The bigger question — the $4.8 billion question — is how this latest massive breach will affect Yahoo’s rapidly approaching sale to Verizon.

As of yesterday, Reuters was reporting that given the back-to-back beach data explosions, Verizon is considering modifying its $4.8 billion offer to scoop up Yahoo’s core internet business.

According to unnamed sources familiar with the matter, Verizon is looking to convince Yahoo to amend the terms of the acquisition agreement made in July to reflect the economic impact of the data breaches. Though Verizon sources still expect the deal will go through — they are adamant that the telecom firm is looking for “major concessions” and is willing to go to court to get out of the deal if it is not repriced.

The exact concessions Verizon is seeking remain unknown.

Until then, however, Yahoo will be dealing with a wave of backlash — as security experts are advising consumers to simply delete their Yahoo accounts at this point.

“Yahoo has fallen down on security in so many ways I have to recommend that if you have an active Yahoo email account, either direct with Yahoo or via a partner like AT&T, get rid of it,” Stu Sjouwerman, chief executive of cyber security firm KnowBe4 Inc, said in a broadly distributed email.

Ouch.

And certainly harsh enough that Yahoo indisputably gets the fizzle of the week.