Yahoo! Inc. (YHOO) chief executive Marissa Mayer continued her ambitious roll up of digital properties Tuesday with the $640 million purchase of video advertising company BrightRoll Inc.
The deal is the first major cash purchase that Yahoo! has made since Starboard Value LP criticized the company's M&A spree in a September letter, and since an October earnings call in which Mayer and CFO Ken Goldman defended the company's moves.
Watch the video below to get Jim Cramer's take on Yahoo's Marissa Mayer and her acquisitions:
Shares of Yahoo! gained 98 cents, or 2%, to $50.03 on Wednesday morning.
How Yahoo! deploys its cash has become a charged issue following the initial public offering of Alibaba Group Holding Ltd. (BABA) , which netted the Sunnyvale, Calif., Internet group about $6 billion after taxes.
Mayer said in the October earnings call that the company will return most of the cash to shareholders, and reiterated her assurance that Yahoo! management is a "good steward" of its funds.
Does BrightRoll pass the good stewardship test? "It could be worse," said Colin Gillis of BGC Financial LP.
The deal comes to about 6.5 times revenue. Reports had put the price closer to 7 times sales.
BrightRoll's strength is video advertising, and the sector has favorable rates and growth prospects. "They paid up for it but at least its an area where they have the potential to monetize the asset," Gillis said.