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Yahoo! (YHOO) Deal to Buy Tumblr Approved? Deal Looks Too Rich

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By Douglas A. McIntyre Updated Published
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via Wikimedia Commons
Just as there were rumors that Yahoo! Inc. (NASDAQ: YHOO) would buy social media site Tumblr, there are not rumors that the deal is finished. It is not clear what a $1.1 billion cash deal would get Yahoo!.

Tumblr revenue last year was only $15 million, according to Forbes. The company hoped to increase that to $100 million this year. That means Yahoo! would be paying 11 times sales–if Tumblr reaches its ambitious revenue goals.

According to The Wall Street Journal:

Yahoo Inc.’s board has approved a deal to acquire blogging startup Tumblr, people familiar with the matter said Sunday.

Yahoo has agreed to pay $1.1 billion in cash to acquire Tumblr, one of the people said.

Tumblr would continue to operate as an independent business, the people said.

A deal could be announced as soon as Monday, one of the people said.

Spokesmen for Yahoo and Tumblr didn’t immediately respond to requests for comment.

By acquiring Tumblr, Yahoo would instantly gain a social-media website that has become a hub of communication and blogging for millions of people. Yahoo could help Tumblr generate more revenue from advertisements.

If Yahoo! cannot significantly lift Tumblr sales, the deal will be a bust. It is worth keeping in mind that Yahoo! is struggling to increase its own revenue

Photo of Douglas A. McIntyre
About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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