Yahoo: $1.1 Billion Tumblr Buyout Blunder?
Yahoo (NASDAQ:YHOO) is buying Tumblr for $1.1 billion, according to The Wall Street Journal. So let's get this straight: On one side of the table we have a big, aging Internet media company that needs to boost profits. On the other side of the table we have a blogging platform that has generate tiny revenues — and no profits. So how exactly will Tumblr boost Yahoo's fortunes? Hmmm…
Frankly, The VAR Guy doesn't have an answer. Consider the stark reality:
- Google has offered blogger.com — a free blog platform — for years.
- WordPress hosts thousands of blogs on its platform.
- Dozens of additional offerings — Blog.com, TypePad and more — offer free blog platforms.
So Yahoo is buying its way into a crowded market to acquire a business that has no profits. Sounds like a disaster.
But The Wall Street Journal sees some potential upside, noting: "New York-based Tumblr, founded in 2007, has 175 employees, more than 108 million blogs and, according to comScore Inc., SCOR +3.85% had nearly 117 million unique users world-wide in March. That is up from around 58 million a year ago. The site is among a number of fast-growing startups, including online scrapbook Pinterest and news aggregation site Reddit…Tumblr lowered the bar for online publishing and effectively merged blogging with social media."
Impressive.
But here's the bottom line: The Journal reported that Tumblr had revenue of $13 million last year. Now, Yahoo apparently is buying the company for $1.1 billion. Does Yahoo CEO Marissa Mayer know something about Tumblr that the rest of us don't? Hmmm…
Updated May 20, 2013, 8:11am ET: Several reports now suggest that Tumblr's revenue this year will be about $100 million… Is that good enough to make Wall Street applaud this deal? U.S. markets open soon…
I don’t know what it is about
I don’t know what it is about Yahoo, but they appear to have made some terrible acquisitions in the past too.
It would seem to me that the most likely reason for this is that Marissa and her crew have been told something by Tumblr execs, none of which may be true/eventuate.
I’m going to bet this one goes in the ‘bad decision’ basket within 8 months of the deal being fully closed.
Socceroos: Reading Yahoo’s
Socceroos: Reading Yahoo’s official press release this morning, it’s clear the company is trying to be “cool” with the younger crowd. The big question: Does the younger crowd spend money that will lift Yahoo profits? Can Yahoo really monetize Tumblr in a huge, huge way???
-jp
The buy would have made sense
The buy would have made sense for $110 million.
They are trying to be cool
They are trying to be cool with the younger crowd, but if you read some past news stories; the younger crowd doesn’t even use Social Networking as much as the Adults do.
Mark my words, this will prove disastrous, in the same manner Microsoft’s research showed users loved Windows 8. In the end, many including myself, moved to Linux and Mac. So now when developers make Games and Apps, if it’s not Cross-Platform, It’s a loss of Money. Remember Devs, more platforms equals more money.
As far as research, It’s been proven to be wrong too many times to count, as Yahoo will soon find out.