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Yahoo Board Approves a $1.1B Pricetag For Tumblr 142

Posted by timothy
from the bedrock-or-pet-rock? dept.
TechCrunch reports that Yahoo's string of acquisitions may soon include Tumblr: "The Wall Street Journal is now reporting via Twitter that the rumored $1.1 billion cash acquisition deal for social blogging site Tumblr has been approved by Yahoo’s board of directors. The Tumblr acquisition was rumored last week, with a price tag reportedly north of $1 billion, which appears to be accurate if the WSJ’s sources are correct." The article notes, too, that "Yahoo had only $1.2 billion cash on hand as of its most recent quarterly earnings, which makes an all-cash offer for Tumblr a lot more of a stretch than it would be for someone like Apple, or even Facebook, which acquired Instagram for $1 billion in a mix of both cash and stock."
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Yahoo Board Approves a $1.1B Pricetag For Tumblr

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  • Making this... (Score:2, Insightful)

    by Anonymous Coward on Sunday May 19, 2013 @01:33PM (#43768569)

    The first Yahoo owned content online I will have actually visited since 1998

  • Re:Strange (Score:5, Insightful)

    by popo (107611) on Sunday May 19, 2013 @01:38PM (#43768611) Homepage

    Not strange at all. Marissa Mayer isn't capable of doing much besides making overpriced acquisitions and hires.

    Here's (yet another) social blogging platform with no clear revenue model.

  • "Social" is a lose (Score:5, Insightful)

    by Animats (122034) on Sunday May 19, 2013 @01:52PM (#43768681) Homepage

    Despite all the noise, almost nobody is making money in "social". Even Facebook isn't very profitable, despite its size. The business strategy in "social" seems to be to give the service away for a few years, build a following, then crank up the density of ads until the users get fed up. Worked for Myspace, right?

    Facebook traffic peaked about a year ago. Twitter is now exploring the user's threshold of pain with "sponsored tweets". This is robocalling in another form.

    Basic truth: ads with search results are useful to users and effective for advertisers, because they're presented when the user is actively looking for something relevant. Ads on "social" are merely annoying because the user is looking at what their friends are doing.

  • Re:Strange (Score:5, Insightful)

    by gweihir (88907) on Sunday May 19, 2013 @02:19PM (#43768829)

    Current stock prices are not a predictor for the future. Well understood by anybody that cared to find out.

  • Re:Strange (Score:5, Insightful)

    by Jherek Carnelian (831679) on Sunday May 19, 2013 @02:21PM (#43768841)

    +1

    I remember laughing my ass off a while back when one of the CEOs in the long line of CEOs at HP said that the stock market is an objective measure of a company's performance. That was a little bit before the dotcom crash IIRC.

  • Re:What a scam (Score:5, Insightful)

    by fustakrakich (1673220) on Sunday May 19, 2013 @02:22PM (#43768853) Journal

    Who cares why? It's a game of roulette.

  • Re:What a scam (Score:5, Insightful)

    by IANAAC (692242) on Sunday May 19, 2013 @02:54PM (#43768977)

    Who cares why? It's a game of roulette.

    The reason our economy is fucked, distilled in one sentence.

  • Re:Let's see (Score:5, Insightful)

    by meta-monkey (321000) on Sunday May 19, 2013 @02:57PM (#43768995) Journal

    Traditional stock valuation methods kind of assume your company isn't a fad that could implode in a heartbeat. There's nothing to think Tumblr has survivability better than say, MySpace. Yes, I can see paying a billion for something that generates 100 million a year...if there's a good reason to think that asset will last more than 10 years. Free-to-use websites that generate 100 million a year for more than a decade are unicorns.

  • Re:So what? (Score:4, Insightful)

    by meta-monkey (321000) on Sunday May 19, 2013 @02:59PM (#43768999) Journal

    You're not wrong, but I had to laugh at the idea of "ruining" GeoCities. That sort of implies that at one time GeoCities was not ruinous, and then became so.

  • Re:Let's see (Score:5, Insightful)

    by Colonel Korn (1258968) on Sunday May 19, 2013 @03:43PM (#43769155)

    So, to reorder your numbers a bit,

    100m in projected revenue / 40m in cost of goods this year = 60m in profits. (40m is from wiki's original source, numbers are projected, so....)
    1.1b market cap / 60m profit = Price/Earnings ratio of 18.

      P/E ratio for the S&P is 14.

    It looks like it has high growth, that would push the numbers up. Huge risk / numbers are projections / I am doing the numbers on the fly without all of the accoutning number - would push the numbers down.

    Ah yes, we should always base P/E ratios on the "hoped for" earnings over the next year, especially when they're about an order of magnitude higher than the real world numbers from right now.

  • by Scorch_Mechanic (1879132) on Sunday May 19, 2013 @04:11PM (#43769311) Journal

    No, I'm not talking about the irritating tween idiots. I'm talking about the artists. For every groupthink mob of self-entitled screaming idiots shouting their misinformed opinions at the top of their tiny little lungs, there's an artist taking advantage of the dead simple microblogging platform.

    Tumblr is the home of the Drawblog (contains art), the Ask (ask a character questions, receive drawn responses) blog, and the art compilation blog. To my knowledge, none of these things substantially exist outside of tumblr. Sure, I could follow an "art appreciation" group on facebook, but because facebook doesn't deliver stuff to me in anything resembling chronological order it's largely useless to me.

    I am worried. Legitimately worried that Yahoo is gonna screw up Tumblr.

  • Re:Strange (Score:4, Insightful)

    by Jafafa Hots (580169) on Sunday May 19, 2013 @08:03PM (#43770237) Homepage Journal

    The only problem with that scenario is that it was Yahoo that bought it.

    Which means Tumblr will go the way of Flickr. It will be milked and ignored until it's about as dated as black and white TV.

  • Re:What a scam (Score:3, Insightful)

    by hairyfeet (841228) <bassbeast1968@ g m a i l.com> on Sunday May 19, 2013 @09:52PM (#43770749) Journal

    They aren't MSFT? Seriously that is it, I can tell you that I have had to set up countless yahoo accounts for my customers in the last 6 months as the switch from Live Messenger and Hotmail to Skype and Outlook (which most of their users I talked to frankly thought was inferior) ran off a LOT of customers.

    Now one would argue that if that was the case why didn't they go to Google but the answer is simple, the way Google treats everything like a chat turns off a lot of the users, and with MSFT shitting all over its customer base trying to be Apple that left only Yahoo. So the fact that Yahoo suddenly got a big bounce really doesn't surprise me, you had a LOT of people that were using Hotmail and Messenger that bailed when MSFT started to force the switch and really Yahoo was the only alternative that was in any way similar to what they had.

  • Re:Strange (Score:4, Insightful)

    by hairyfeet (841228) <bassbeast1968@ g m a i l.com> on Monday May 20, 2013 @08:51AM (#43772613) Journal

    I think its pretty obvious why they want to sell, they lost 12 million bucks last year and there really is no way to monetize the users without them all just leaving. That is the whole problem with all this "social" aimed crap in a nutshell, any attempts to monetize them will result in a shittier experience and the users walking away.

    But yeah opportunity cost is a good way of looking at it, if these companies buy one too many stupid companies when that smart company that might actually be a good fit comes along they may either be short of capital or the board will be seriously reluctant to spend the money in light of previous failures. I mean if a perfect fit for HP came along that cost say 4 billion how likely do you think the board will be to bite when they've had to write off over 10 billion from previous deals? And this one is insanely stupid, spending 92% of their cash on a single company that hasn't even turned a profit yet?

    if I didn't know better I'd be wondering if this CEO is a plant designed to lower the value thus making it easier to buy Yahoo out, but sadly more likely just another incompetent rich CEO that will make a ton of money no matter how stupidly or badly they do their job. The rich get richer is one of the few constants in the universe it seems.

  • Re:Strange (Score:5, Insightful)

    by evilRhino (638506) on Monday May 20, 2013 @09:54AM (#43772997)

    While we like to mock CEOs, at the end of the day they got to where they are by being good at what they do...

    This is a false premise. It is just as likely that they have gotten where they are by social acumen, and have no idea what they are doing.

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