Buying Tumblr (Yahoo! confirmed the deal on Monday), is a good start to turn core Yahoo! around. It helps bring the "cool" factor back to Yahoo!, says Cantor Fitzgerald analyst Youssef Squali. "Tumblr attracts a younger and more engaged audience than the more stayed
Yahoo!'s share price has jumped this year, gaining 33.3% year to date, and around 70% since Mayer took over as CEO in July 2012, thanks in large part to increased valuations of its Asian assets, Alibaba and Yahoo! Japan. The share price jump buys Mayer time to figure out how to best utilize Tumblr to turn core Yahoo! around, but it's not going to be easy.
On Mayer's Tumblr, she promised "not to screw it up."
"Tumblr is incredibly special and has a great thing going," Mayer added. "We will operate Tumblr independently. David Karp will remain CEO. The product roadmap, their team, their wit and irreverence will all remain the same as will their mission to empower creators to make their best work and get it in front of the audience they deserve. Yahoo! will help Tumblr get even better, faster."Yahoo! is holding a press conference on Monday in New York at 5 p.m. EDT, presumably to discuss the merger, though no official details have been announced. TheStreet will be attending the press conference live. I recently suggested three places for Mayer to consider spending Yahoo!'s cash, including Zynga (ZNGA - Get Report), Yelp (YELP - Get Report) and Pinterest. Those companies are poised to produce significantly more in annual revenue than Tumblr, though all three would've come at a higher cost than the $1.1 billion deal for Tumblr. Yahoo! is chasing a younger audience here, the 18-to-34 age group that primarily uses Tumblr. For now, it's been reported that Yahoo! will give Karp and his team independence, except for some back-end stuff, and expanded opportunities for distribution. That's the right idea until Mayer, Karp and their respective teams figure out how to best monetize Tumblr's vast user base in a meaningful way. -- Written by Chris Ciaccia in Newport Beach, Calif. >Contact by Email. Follow @Chris_Ciaccia
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts