Tumblr Users Fear Not – Yahoo Promise “Not To Screw It Up” Following $1.1b Purchase

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It’s a bold move from Yahoo Chief Executive Marissa Mayer, who ticked the boxes, signed on the dotted lines and generally ‘thumbs upped’ the purchase of Tumblr – a website that has never posted a profit, makes a fraction of Yahoo's sales, and probably won’t contribute significantly to revenue for years to come.

But it’s a move she and Yahoo have made, than they’ve promised not to “screw it up.” Hear that Tumblrs? They promised! "Tumblr in terms of users and traffic is an immediate growth story for us," said Mayer. "Per the agreement and our promise not to screw it up, Tumblr will be independently operated as a separate business," Yahoo said in a statement. RBC Capital Markets analyst Mark Mahaney called it a "long-shot/long-term investment" but admitted it makes sense in the wider spectrum of Mayer’s strategy. "(Yahoo's) fundamentals have been subpar for numerous years, in part because of the company's missing presence in Social and Mobile. Tumblr may help (Yahoo) develop that presence," Mahaney said, according to Reuters.

There’s no doubting that Tumblr is hugely popular – it garners users in the tens of millions, each month. But that doesn’t mean it’ll be a hugely profitable move for Yahoo!, in fact, it’s difficult to see where they’ll go with the social blogging site. "Even if revenue was $100 million, it means Yahoo paid 10 times revenue," said BGC Financial analyst Colin Gillis. "Ten times is what you pay to date the belle of the ball. It's on the outer bands of M&A." Sure, we don’t know what that means, really. But it sounds bad. “Outer bands of M&A” sounds bad.


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