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Why cybersecurity truly matters: Yahoo hack jeopardizes $1B in company value

We all know all too well of the massive Yahoo hack that compromised hundreds of millions to billions of accounts. What we didn’t know until last night was how much that sweeping compromise of security would effect the valuation of Yahoo by Verizon.

Then it broke last night (October 6th) that Verizon wanted to knock off $1B from the offer for Yahoo. While we don’t know the terms of the original agreement, it seems unlikely that Verizon would offer such a dramatic discount without legal precedent.

If my calculations are correct that makes this hack the most destructive (in terms of multiples/market capitalization) that has ever effected an acquisition: Close to $1-2 of value destroyed per user account compromised.

This is why, in my humble opinion, cybersecurity will become a critical component of every company’s IT. The reputational, financial and other risks are simply too high for it to be ignored.

Yahoo was perhaps the biggest most public wake up call about what happens when a company’s management is ‘out to lunch’ on this issue. It would have cost Yahoo far less than a billion to secure their networks and systems properly.

We’ll see how this effects the cybersecurity sector as a whole, but I anticipate spending to rise (and be one of the only components of IT spending that does rise in 2017).

Posted in cybersecurity.