How Far Will Yahoo's New Acquisitions Take Them?

Ajay Prasad
Google has dominated the top spot as the best search engine for many years, but it seems that Marissa Mayer has some tricks up her sleeve. The 38-year-old was ranked number 14 on the Fortune Magazine list of 'America's Most Powerful Businesswomen of 2012', and this is thanks in large part to the experience she gained as the key spokesperson and executive of Google.

Since she was appointed President and CEO of Yahoo! in 2012, Marissa has transformed the way the Internet corporation works. Recently, Yahoo announced their plan to buy blogging platform Tumblr for $1.1 billion. This bold move indicates the way in which the company aims to revolutionize. David Karp, a high school dropout, founded Tumblr in 2007 and the website now boasts over 108 million active blogs.

 Tumblr features include:

  • Customized design
  • Custom domain
  • SEO
  • Publishing
  • Social media integration
  • Q&A
  • Apps

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.

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Ajay Prasad

Ajay Prasad is the Founder and President of GMR Web Team, a leading healthcare digital marketing agency. He guides small and medium size healthcare practices/businesses in customizing their online marketing strategy, focused on building a loyal base of patients and improving their patient acquisition. Ajay believes in an improved patient experience as the key to successful healthcare business, which can be accomplished with the right marketing plan in place.


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