Yahoo: $1.1 Billion Tumblr Buyout Blunder?
Yahoo apparently is buying Tumblr for $1.1 billion. But Tumblr had only $13 million in revenue last year. Does Yahoo CEO Marissa Mayer know something about Tumblr's blog platform that the rest of us don't?
May 20, 2013
![Yahoo39s 11 billion buyout of tumblr could be announced May 20 The Wall Street Journal reported Yahoo39s 11 billion buyout of tumblr could be announced May 20 The Wall Street Journal reported](https://eu-images.contentstack.com/v3/assets/blt10e444bce2d36aa8/bltbd0f9e094c73e839/6526818a39e8d86cca18ff63/yahootumblr2_0.jpg?width=1280&auto=webp&quality=95&format=jpg&disable=upscale)
Yahoo (NASDAQ:YHOO) is buying Tumblr for $1.1 billion, according to The Wall Street Journal. So let's get this straight: On one side of the table we have a big, aging Internet media company that needs to boost profits. On the other side of the table we have a blogging platform that has generate tiny revenues — and no profits. So how exactly will Tumblr boost Yahoo's fortunes? Hmmm…
Frankly, The VAR Guy doesn't have an answer. Consider the stark reality:
Google has offered blogger.com — a free blog platform — for years.
WordPress hosts thousands of blogs on its platform.
So Yahoo is buying its way into a crowded market to acquire a business that has no profits. Sounds like a disaster.
But The Wall Street Journal sees some potential upside, noting: "New York-based Tumblr, founded in 2007, has 175 employees, more than 108 million blogs and, according to comScore Inc., SCOR +3.85% had nearly 117 million unique users world-wide in March. That is up from around 58 million a year ago. The site is among a number of fast-growing startups, including online scrapbook Pinterest and news aggregation site Reddit…Tumblr lowered the bar for online publishing and effectively merged blogging with social media."
Impressive.
But here's the bottom line: The Journal reported that Tumblr had revenue of $13 million last year. Now, Yahoo apparently is buying the company for $1.1 billion. Does Yahoo CEO Marissa Mayer know something about Tumblr that the rest of us don't? Hmmm…
Updated May 20, 2013, 8:11am ET: Several reports now suggest that Tumblr's revenue this year will be about $100 million… Is that good enough to make Wall Street applaud this deal? U.S. markets open soon…
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