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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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  • Strange (Score:5, Funny)

    by XPeter (1429763) on Sunday May 19, 2013 @01:31PM (#43768555) Homepage

    They could've bought YouPorn for a lot less.

    • 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.

      • Re: (Score:1, Informative)

        by fustakrakich (1673220)

        I don't think you know what you're talking about [addictinginfo.org]

        • 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.

            • by gweihir (88907)

              Indeed. I think I read that also and it was one of the moments that reinforced my belief that most CEOs do not have a clue how their business works.

              • Re: (Score:3, Informative)

                by jythie (914043)
                The know what makes their short term investors happy and their stock options valuable....

                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. The problem is what WE think they should be doing and what actually pays off is pretty out of sync. Right now the job market for CEOs rewards short term profits at the expense of long term viability. Investment in the future is generally punished. Granted the public and the tech community might point out that
                • 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.

          • Maybe not, but a year long trend is somewhat noteworthy, and I'm sure some people, including the pretty little Ms Mayer, are pleased with the performance of Yahoo. Now, unless the role of CEO is entirely ceremonial, to call her 'incapable' seems out of touch, don't you think? She is making money for her associates, and nothing else matters.

        • Source: Yahoo Finance

          Oh my god IT'S ALL A BIG CONSPIRACY!

        • And #2 is... AOL, seriously?

        • Source: Yahoo! Finance

          Nothing suspicious to see here folks.

        • Re:Strange (Score:4, Interesting)

          by rtb61 (674572) on Monday May 20, 2013 @04:12AM (#43771949) Homepage

          I really hope you don't think management should take credit for a price rise following a price drop and a failed buyout and no perceived future, no, surely you wouldn't do that. Neither would you take credit for any revenue increases that were simply inflationary or even worse bought in. That would be really really be blonde dumb. Better POE ratios and improvements in the value of assets but please not "I'VE GOT PUPPIES, LOTS AND LOTS OF PUPPIES". You might impress the non-investor but those with a bit more nous are going to look on you as the fool. That puppies thing, nobody said much at the time because it was just so, so, ???!!! seriously that was a business plan, puppies.

      • by gweihir (88907)

        Indeed. At Google that did not matter, as they have heaps of money to throw after one bad project and acquisition after another and still be very profitable. At Yahoo, this will just kill the company, even if it may take a while.

        • Yahoo is also sitting in a nice pile of cash 4 bil i think.

        • Am I the only one who's reminded of the end times at Sun by this?

        • by hairyfeet (841228)

          You know, I have heard that argument several times and i just don't think it holds up to logic, its the same one that MSFT apologists use when explaining away why all their failed acquistitions don't matter but just because they have a LOT of money does not mean they have INFINITE money, and one can only throw around a billion here and a billion there before as they say in Washington it becomes "real money".

          Can Google, Apple, and MSFT piss more money away with zero ROI? Sure they can. does that mean it i

          • by gweihir (88907)

            As long as they have one primary cash-cow, they can do arbitrarily bad management of the rest. And they do. For MS it is Office and Windows, but these seem to be getting more and more shaky, hence the desperate attempt to get onto phones and tablets by giving the desktop OS the same GUI. Still, even with that MS can waste a lot of money. They have gotten more careful though, at least that is my impression. Apples is a different case, they were close to death and know it. They _are_ very careful. But Google

            • by jbolden (176878)

              The cash cows for Microsoft are their server products SQL Server, Dynamics, Sharepoint, Lync...

          • You know, I have heard that argument several times and i just don't think it holds up to logic, its the same one that MSFT apologists use when explaining away why all their failed acquistitions don't matter but just because they have a LOT of money does not mean they have INFINITE money, and one can only throw around a billion here and a billion there before as they say in Washington it becomes "real money".

            Can Google, Apple, and MSFT piss more money away with zero ROI? Sure they can. does that mean it isn't gonna hurt them over time? That would depend on how much positive cash flow they can keep coming in and whether or not spending that money on stupid shit costs them an opportunity down the road that could have actually worked.

            What is the point of being rich if you can't blow money at will? That is the definition of being rich and the point of being rich.

          • by gtall (79522)

            I think what you are after is the opportunity cost. Chasing an acquisition means integrating that acquisition into your current environment which generally means a culture clash. The people from the acquisition are the leadership and the rank and file. The leadership, if they have any sense at all, will be looking for the exits as soon as the deal closes because the chances they will be replaced are high if only because the powerbases in the new company will want them gone. The rank and file will probably b

            • Re:Strange (Score:4, Insightful)

              by hairyfeet (841228) <bassbeast1968@@@gmail...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.

    • I see the strategy. This and a service like Summly mixed together. Intelligent shared content on a huge scale. That could actually be something pretty awesome. Really make Twitter totally obsolete.

  • I kind of liked Tumblr. Not that I ever felt the need to sign up for an account.

    • by Seumas (6865)

      I never understood the appeal of it and I don't see the billion dollar value of it. There are already a thousand other popular blogging platforms - Blogger probably being the most prominent . . . except Blogger seems to be more useful since you can actually leave comments on someone's update (I've never intentionally gone to a Tumblr page, but when I wind up there, they never seem to allow any comments and are just a stream of other idiots linking to it for about five hundred lines at the bottom of the page

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

    by Anonymous Coward

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

    • by dingen (958134)

      You never look at pictures on Flickr then?

      • by Seumas (6865)

        Who wants to look at someone else's stupid photos?

        And if you're looking for photos, in general, for some purpose -- you usually just use Google Image Search . . .

        • by jampola (1994582)
          "Who wants to look at someone else's stupid photos?"

          Yep. That's why we have Instagram!
          • by Seumas (6865)

            For the same purpose as facebook -- not to look at other peoples stuff, put to vomit our own into a stream that we believe followers are on the edge of their seats for.

            Also, instagram is exactly as stupid, "original", and overpriced as Tumblr.

  • Let's see (Score:5, Interesting)

    by Intrepid imaginaut (1970940) on Sunday May 19, 2013 @01:35PM (#43768579)

    From wiki: Tumblr made $13 million in revenue in 2012 and hopes to make $100 million in 2013. So far, Tumblr has taken $125 million in funding from its backers. Tumblr reportedly spent $25 million to fund operations last year.

    So it's making a loss of $12 million a year and yahoo is willing to fork over $1.1 billion on the hope that it might actually make $100 million this year?

    Interesting!

    • by alen (225700) on Sunday May 19, 2013 @01:52PM (#43768685)

      With these numbers it's worth $10 billion

      You have to value it in eye balls

    • Ya-who? (Score:5, Funny)

      by tutufan (2857787) on Sunday May 19, 2013 @02:18PM (#43768825)

      Yes, but on the plus side, they now have a brand that people think of as still being in business...

    • by gweihir (88907)

      No, stupid. The decision of a CEO desperate to find something that works. Betting on the wrong horse is a time-honored tradition with inexperienced CEOs. Some get lucky, but not this time.

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

      by alexander_686 (957440) on Sunday May 19, 2013 @02:23PM (#43768859)

      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.

      • numbers are projected

        Indeed they are.

        • Well, yeah.

          Today's value of a stock (bond, or any finical asset) is based on all future cash flows discounted (i.e. interest rate / time value) . So the real question is: How confident are you in your projected cash flows? Sold or is just a piece of blue sky? (See security rules on “Blue Sky” companies.)

      • 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.

        • by hairyfeet (841228)

          Bingo! Give that man a ceegar! The problem with spending any real money on these things is that the users have zero brand loyalty and can just disappear like a fart in the breeze, we have seen this time and time again, from MySpace to Flickr, you try overloading the place with ads to try to get your money back and the users bail and you are left with a ghosttown...how much did Yahoo pay for Flickr or Geocities?

          The sad part is this CEO is not only doing something insanely stupid, they don't even seem to real

      • 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 Seumas (6865)

      Because cupcakes.

    • And even if we assume the best case scenario: Tumblr becomes "super profitable" and makes $100 million every year, it'll take 11 years just to pay off the $1.1 billion that Yahoo spent on it. 11 years is forever in the tech industry. Why, 11 years ago Yahoo! was a viable search engine just barely behind Google in market share!

  • by arcite (661011) on Sunday May 19, 2013 @01:39PM (#43768617)
    Must be nice to run a multi-billion dollar corporation that makes barely any profit and spend money like a drunken sailor.
    • Yeah, yell, any drunken sailor that almost double the value of my investment in one year [google.com] (you have to click on the button) is alright with me

      • Yeah, yell, any drunken sailor that almost double the value of my investment in one year [google.com] (you have to click on the button) is alright with me

        The question is why. What has Yahoo actually done in the last year to justify a near doubling of their share price? Have they put out a new product that everyone loves which is making them gobs of money? Unless you consider canceling work-from-home and paying out a shitload of money for a half-assed content summarizing app stroke of genius ...

        • 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: (Score:3, Insightful)

          by hairyfeet (841228)

          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

  • "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: (Score:2, Informative)

      by meta-monkey (321000)

      Also, you need replacements to sustain the user base. For a site that started for college-aged users, the demographics of facebook are aging. Teens/students don't want to be on FaceBook because their parents (and grandparents) are on FaceBook.

      • by Anonymous Coward

        I think it's a huge mistake for Facebook to have a policy of no children allowed under the age of 13 (even with COPPA forms). It really needs to become part of children's lives *before* they start wanting to hide things from mom and dad. That's EXACTLY how they're going to lose out on the next generation.

    • You forgot "get acquired for an absurd amount of money by a corporation with billions to throw around and a dunce CEO, spend the rest of your life sucking down fruity drinks on a beach".
    • by Seumas (6865)

      I still don't understand how Tumblr is "social". The few times I've (unintentionally) landed on someone's pages on Tumblr, I see absolutely no interaction going on. I don't even fucking know if Tumblr has the capacity/features for interaction (it just always looks like streams of updates or photos with no comments or other input whatsoever). I thought Tumblr was a poor-man's blogging service without any features and am absolutely baffled to find out that it either makes a dime or is worth a billion dollars.

  • Guess that is the beginning of a series of fatal decisions that will seal Yahoo's fate. None of those making these bad decisions will suffer for it though.

    • by BonThomme (239873)

      the beginning?

      • by gweihir (88907)

        The key word being "fatal", as in "starting the end-game". You are quite right though that there were a lot of bad decisions before, and it looks likely that the worst decision was actually not tumblr, when I think about it, but hiring the new CEO. So, yes, I stand corrected.

  • by randomErr (172078) <ervin...kosch@@@gmail...com> on Sunday May 19, 2013 @02:16PM (#43768809) Homepage Journal

    A company that has $13 million [wikipedia.org] in revenue in 2012 and hopes to only make $100 million in 2013 is purchased for 1.1 billion? This smells of a multi-level pump and dump scheme.

    I will bet what will happen in the next 18 months is: Yahoo buy's out Tumblr. Tumblr's CEO sells all his stock Monday morning and get insanely rich. The new tYahoo company goes bankrupt by the end of the year. Microsoft or Bill Gates himself will swoop in and FINALLY by buy Yahoo making the current CEO insanely rich. If gates himself buys it sells Yahoo back to MS and adds to his insane fortune. Microsoft and integrates all of tYahoo's tech into MS and starts a second round of war against Google search and Google products.

    • by Xest (935314)

      Something stinks about all of Yahoo's acquisitions so far.

      I've pointed out previously what a sham the summly acquisition ones. Long story short, summly was largely a shell of a company that outsourced development to 3rd parties for everything but the iOS user interface - the AI, the Android version etc. were all outsourced. The company CEO were a few silicon valley vets bought in by the kids' Dad who was an investment banker and his mum who was a Yahoo lawyer. The investment banker father got people like St

  • by pseudofrog (570061)
    my feels! i can't
  • Hey, Yahoo, remember that other photo-sharing site you already fucking own? [flickr.com]

    Please, do, tell me what 1.1 billion dollars worth of tumblr brings to the table that a mild reskin(to put the pictures with captions in columns, rather than in 'galleries') of flickr could have ready to demo inside a week and roll out in short order?

    • by sehryan (412731)

      Tumblr isn't a photo sharing site, it is a micro blogging platform. Flickr has photos and I think video (upload). Tumblr has photos, video, audio, and finally text, which further breaks down in to posts, quotes, and links.

      So please, tell me how a five day sprint to reskin Flickr is going to add all of those additional features.

      • Tumblr isn't a photo sharing site, it is a micro blogging platform. Flickr has photos and I think video (upload). Tumblr has photos, video, audio, and finally text, which further breaks down in to posts, quotes, and links.

        So please, tell me how a five day sprint to reskin Flickr is going to add all of those additional features.

        No, Tumblr is a crappy niche site used almost exclusively for photo sharing and operating at a significant loss.

    • by ColdWetDog (752185) on Sunday May 19, 2013 @03:59PM (#43769249) Homepage

      Look, you guys don't get it, do you? You never get this sort of thing.

      Of course Flikr and Tumblr will mix well. They both end in a contracted 'r'.

      It's pretty clear why you all aren't in business.

    • by jbolden (176878)

      Depending on how you count somewhere between 200m - 1/2 billion users who rarely if ever use Yahoo. Also David Karp as a Yahoo executive for 4 years.

  • Dangerous Games (Score:4, Interesting)

    by Whatchamacallit (21721) on Sunday May 19, 2013 @03:17PM (#43769069) Homepage

    Tumblr is worth exactly squat if Yahoo screws with it too much. A social platform is only as good as it's users. If the users abandon the platform in protest to Yahoo's new direction it will spell the doom of Yahoo! Instagram's transition was initially painful and they lost a good deal of users. Yahoo has to be very careful, best to keep things the same for a long time and then slowly introduce improvements that will excite and encourage the customer base and not annoy them. A major misstep and it can all come crashing down very quickly... Social media is a high stakes game. To pay that much for Tumblr is an extreme gamble.

  • by Anonymous Coward

    Yahoo is trying to buy the pieces they need to create an integrated end-to-end platform that combines Google and Facebook. They don't want to develop a code base, because they're too late to the game. Google and Facebook have been doing it for a decade or more. Yahoo can't afford to catch up. They're buying all the pieces they need, and ... well, they'll integrate it. That's going to be the hard part. Anyhow, Yahoo is paying a premium to gobble up all the pieces they need to be more mobile-device oriented t

    • No, Yahoo is trying to buy sexy brands. All the technology in the world won't get you attention if you don't have a recognizable brand. Bing works pretty well, maybe as well as Google Search, but since so many people hate Microsoft they just can't dethrone Google for search. Facebook could have built their own Instagram in a month, Mark Zuckerberg didn't buy it for the technology, he wanted to own the Instagram name.

      Yahoo's biggest problem is that everyone considers it old news. Mayer is trying to
  • 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.

    • by dingen (958134)

      So they'll just move to Wordpress or Blogger or use some other random blogging platform. What's the problem?

    • by Seumas (6865)

      Bothering to make your own website seems to sadly be a lost art and something even a twelve year old child was capable of doing. Now, if it isn't a click away and shoved in our face, we can't be bothered to do it.

      Ideally, Yahoo! buys Tumblr. Fucks it up. Tumblr goes away. Maybe they can do the same with eHow and the other festering crap of the internet that plagues Google's search results.

    • by thoth (7907)

      Nobody fights for the users because they are the product, as they are utilizing Tumblr's services for free and are thus not customers.

      Besides, this is a private corporation in corporate America, which is by definition infinitely wise in how they allocate their hard earned resources because they are guided by the never-erring invisible hand. If this somehow turns out to be a huge mistake (gasp!), they will be suitable punished by the market, whereby punished means senior executive make their payday anyway wh

    • by Mex (191941)

      No offense, but are you 16, or perhaps never explored the internet? There's hundreds of alternatives to blogging platforms, including rolling your own. I think even Google Plus works like you'd want with super advanced "Chronological order" features.

      I imagine Yahoo will indeed screw up Tumblr, but "Think of the artists!" is the last reason to get worried about...

  • 1 billion for buying a user community that does not pay anything, and is served 13 millions in advertising? Um, Internet bubble is coming back. [wikipedia.org]
  • Financially it's a high risk low return purchase. The technology behind Tumblr is just surface college undergrad level stuff. Micro-blog + Media is all they get. Might as well just revamp Flickr services for a 25% of the cost. So I'm left with thinking that the billion dollars cash on the barrel is to maybe purchase Tumblr's community of users. This is a huge blind gamble, that isn't close enough to pay off in a really really long time. If Yahoo thinks that the age of Tumblr's user base will continue to gro
    • I couldn't help but think that Tumblr could be recreated with a free copy of WordPress MultiSite and some plugin/theme work. If Yahoo took that path, the investment would have been a LOT less than $1.1 billion. Of course, they wouldn't have gotten the "eyeballs" already on Tumblr but, like you said, those Tumblr users might not stay Tumblr users and definitely can't be counted on suddenly becoming Yahoo users. Buying a currently hot (in terms of user usage but not in terms of profitability) company in th

  • Just like MusicMatch?
    Just like Konfabulator?
    Just like Geocities?
    Just like Dialpad?

    I'm not holding out much hope for Yahoo's ability to successfully leverage an acquisition.

No amount of careful planning will ever replace dumb luck.

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