How Far Will Yahoo's New Acquisitions Take Them?
Tumblr features include:
- Customized design
- Custom domain
- Social media integration
Karp will secure $250 million for his 25% stake in the business. Yahoo’s large investment tops the $1 billion that Facebook paid for Instagram last year. As social networking becomes increasingly popular (and vital to businesses in all niches), Yahoo is jumping on the bandwagon as a way of breathing new life into the company. While this may seem wise, people are speculating that Ms. Mayer’s decision may not be very profitable.
Why? Because Yahoo actually has a reputation for paying big sums of money for startups and failing to nurture and sustain them. The big question on most people’s mind is, “Will Yahoo shareholders make money from this deal?” While the answer to this question is unclear, there are certain statistics that give us an insight into Tumblr’s power. Analysts and investors are concerned that Tumblr’s disappointing 2012 revenue--$13 million--puts Yahoo at risk of failure.
For 2013, the blogging platform aimed to rake in $100 million, but with figures of $13 million in the first quarter of the year, this goal does not seem feasible. Yahoo may be paying too much for Tumblr and unless the team can integrate it properly, the acquisitions may not take them far at all. Despite this, Ms. Mayer scooped $4.3 billion in cash after selling half of Yahoo’s stake to Chinese Internet Company, Alibaba.