Honestly, I still have no idea what Tumblr is, and I have numerous friends who live and die by theirs.
Perhaps the biggest shock here is that Yahoo had a billion dollars lying around. They’ve been in rough shape for years, if not most of the decade. One of my old co-workers at Heritage got his start at Yahoo prior to coming to D.C. and even in 2009, he was telling me horror stories of what was going on there.
I wish them the best with move, but frankly, given the way that Google has become so engrained into the culture that it is now a verb, you have to start wondering just how Yahoo is able to return to its former glory. Buying up other pieces and companies just doesn’t seem like an intelligent long-term strategy in my opinion.
Yahoo is buying online blogging forum Tumblr for $1.1 billion as CEO Marissa Mayer tries to rejuvenate an Internet icon that had fallen behind the times.
The deal announced Monday represents Mayer’s boldest move yet since the Wausau native left Google 10 months ago to lead Yahoo’s latest comeback attempt. It marks Yahoo’s most expensive acquisition since the Sunnyvale, Calif., company bought online search engine Overture a decade ago for $1.3 billion in cash and stock.
Yahoo is paying all cash for Tumblr, dipping into some of its remaining stash from a $7.6 billion windfall reaped last year from selling about half of its stake in Chinese Internet company Alibaba Holdings Group. Taking over Tumblr will devour about one-fifth of the $5.4 billion in cash that Yahoo had in its accounts at the end of March.
Yahoo also says that “per the agreement and our promise not to screw it up, Tumblr will be independently operated as a separate business” with David Karp staying on as CEO.
Tumblr, a service started six years by Karp, a high school dropout, now figures to play a pivotal role in Mayer’s attempt to reshape Yahoo. To take on the challenge, Mayer ended a highly successful 13-year career at Google, which she helped surpass Yahoo as the Internet’s most influential company. Since coming to Yahoo, Mayer has concentrated on improving employee morale, redesigning services and bringing in more engineering talent through a series of small acquisitions that have collectively cost less than $50 million.
Said to be first on Mayer’s agenda with the new acquisition — getting ads on people’s Tumblr blogs to increase revenue flow.
Currently, Tumblr has never allowed advertising. It, like most online social start-ups, has let their users do what they want with ads. Most of what has kept Tumblr going in recent years has been start up funding. It explains why they only have 175 employees at the moment.