Yahoo! has reportedly agreed to pay $1.1 billion for the social media blogging site Tumblr. The board unanimously agreed to the purchase, which included keeping David Karp, the CEO of Tumblr, with Yahoo! for at least four years. He will remain CEO and keep a proactive role in its future.
Urken noted that Tumblr will continue to operate as a separate entity from Yahoo!. She added, "You're buying Mayer's judgment here." Cramer also noted that in many other cases, investors are buying into the CEO's vision, such as Facebook's (FB) Mark Zuckerberg and Starbucks' (SBUX) Howard Schultz.
He went on to say the acquisition could be huge for Yahoo!'s CEO Marissa Mayer, or "maybe she's going to strike out, but she's on the map," he said. Tumblr is not a competitor to Yahoo! and the acquisition is seen as a branding mechanism, in his opinion.Yahoo! expects the deal to increase its traffic by 50%, to over one billion monthly users. The acquisition was made in an effort by Yahoo! to increase its site traffic, particularly from teens and young adults. The $1.1 billion purchase represents roughly one-fifth of Yahoo!'s $5.4 billion in cash. To sign up for Jim Cramer's free Booyah! newsletter, with all of his latest articles and videos, please click here. -- Written by Bret Kenwell in New York..