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Pledging Not To ‘Screw It Up,’ Yahoo Seals Deal For Tumblr

Filed by KOSU News in Business.
May 20, 2013

The news that broke Sunday is now official.

Yahoo confirmed early Monday morning that it is buying Tumblr in a deal worth about $1.1 billion. “Per the agreement and our promise not to screw it up, Tumblr will be independently operated as a separate business,” Yahoo added.

In its statement announcing the deal, Yahoo says that:

“Tumblr can deploy Yahoo!’s personalization technology and search infrastructure to help its users discover creators, bloggers, and content they’ll love. In turn, Tumblr brings 50 billion blog posts (and 75 million more arriving each day) to Yahoo!’s media network and search experiences. The two companies will also work together to create advertising opportunities that are seamless and enhance the user experience.”

Yahoo CEO Marissa Mayer says in the statement that “fundamentally, Tumblr and Yahoo! are both all about users, design, and finding surprise and inspiration amidst the everyday.”

Tumblr CEO David Karp adds that:

“Our team isn’t changing. Our roadmap isn’t changing. And our mission — to empower creators to make their best work and get it in front of the audience they deserve — certainly isn’t changing. But we’re elated to have the support of Yahoo! and their team who share our dream to make the Internet the ultimate creative canvas. Tumblr gets better faster with more resources to draw from.”

Not all outside opinions are that favorable:

– Forbes contributor Peter Cohan says the purchase “fails 4 tests of a successful acquisition” because “Tumblr’s industry is not attractive … [the] combined companies are worse off … Yahoo is over-paying … [and] Yahoo will struggle to integrate Tumblr.”

– “A billion bucks is a lot to pay for a company that has so little revenue — just $13 million last year,” notes ABC News.

But The Wall Street Journal says that “Yahoo needs the growth. Its annual revenue has been stuck for years around $5 billion, and the company’s big presence on personal computers hasn’t translated well to mobile devices, where it lacks the advantage of Apple Inc.’s coveted hardware or Google’s ubiquitous smartphone operating software, Android. Meanwhile, Facebook and Google have demonstrated that a vast audience for free content can bring in significant advertising revenue.” [Copyright 2013 NPR]

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