Strong rumors are surfacing that Yahoo will be buying social media site Tumbler.com on Monday for about 1.1 billion dollars. Unless Facebook owner Mark Zuckerberg takes the advice of Silicon Valley mini mogol Jason Calcanis (and he won’t), it would seem this deal is probably going to go through.
Is this as great a move for Yahoo as Jason C seems to think? I’d say sure if it shakes Yahoo into a more appropriate roll as a key player in the online social media space. Despite massive amounts of activity and traffic, Yahoo’s been in Google’s shadow pretty much as along as Google’s been around to beat Yahoo like a rented mule – and beat them at pretty much everything they’ve both tried to do. Flickr is an exception to this, and perhaps Mayer’s gameplan will be to aquire projects that can give Google a run for the big advertising money in various venues. Could Mayer even have her eyes on search? Yahoo threw in that towl long ago, but Microsoft’s Bing seems to bounce back into the behemoth’s online strategy every few years. Bing’s quality is comparable to Google’s, so look for something interesting to happen with a Yahoo Microsoft partnership (or aquisition of YHOO by MSFT, as should have happened years ago when Microsoft offered to buy YHOO for about $31 per share, far above Yahoo’s curent valuation). New CEO Marissa Mayer was exactly what the Yahoo doctor ordered – somebody who will take calculated risks and has an intellectual and competitive incentive to succeed where so many others have conspicuously failed.
All Things D appears to be the site that broke this story: http://allthingsd.com/20130517/yahoo-board-to-meet-sunday-to-consider-1-1-billion-all-cash-deal-to-acquire-tumblr/
Disclaimer: I own YHOO stock
Only in Silicon Valley could a CEO get away talking about their brand “kicking ass”, but Yahoo’s in Silicon Valley and Carol Bartz is their new tough talking CEO, who today wrote in Yahoo’s official blog “Yahoo Anecdotal” that Yahoo is “Getting our house in order“. Among other thing Bartz says she is :
….rolling out a new management structure that I believe will make Yahoo! a lot faster on its feet. For us working at Yahoo!, it means everything gets simpler. We’ll be able to make speedier decisions, the notorious silos are gone, and we have a renewed focus on the customer. For you using Yahoo! every day, it will better enable us to deliver products that make you say, “Wow.”
When former Yahoo CEO and co-founder Jerry Yang (Yahoo was co-founded with David Filo) left the company a few months ago Carol Bartz stepped in aggressively, presumably tasked by Yahoo’s board to either turn the company around or prepare for a sale of Yahoo Search, or perhaps even the entire company, to Microsoft.
Given that turning Yahoo around is considered by most to be extremely challenging and long term, I think we should assume Bartz is working the Microsoft sales angle even though much of the tough talk is more along today’s lines of restoring the second most recognizable internet brand to at least a shadow of Yahoo’s former glory. Note though that even assuming a sale to MIcrosoft is in the goal, it’s probably in Yahoo shareholder’s best interests for Bartz to talk and work towards shoring up the brand, hoping to encourage Microsoft to offer more of a premium over the current share price than they might if they knew a deal was inevitable.
We can get some insight into what Carl Icahn – one of Yahoo’s largest shareholders and board members – is looking for in this deal thanks to this excellent report on his stock holdings and pricing. With an average share price is in the neighborhood of $20-25, I would argue that Icahn wants Microsoft to come in somewhere north of that for him to agree to a sale. Microsoft offered $31 officially last year before the stock meltdown and most fell they would have paid about $34, but clearly that deal is long off the table. However given Microsoft’s lackluster online performance and the chance for a crack at Google’s dominance, look for Microsoft to make an offer soon. Look for Yahoo to probably take it.
DISCLOSURE: Technology Reporter Joe Hunkins is long on YHOO
The Wall Street Journal is reporting that Carol Bartz is about to accept Yahoo’s offer to be their new CEO, replacing Jerry Yang after his stint of about a year where Yahoo saw their share price collapse after a rejection of offers from Microsoft that many feel were as much an ego play by Yang than a reasoned business decision.
Bartz has been CEO of Autodesk and it remains somewhat unclear why Yahoo’s board sees Bartz as the best person for the job at this challenging time in Yahoo’s corporate history. One idea bandied about on CNBC right now is that Yahoo’s plans are to sell off their search business to Microsoft and then reinvent themselves as a software company, although I’m skeptical even Yahoo would be so foolish as to think they can monetize software in the current online environment where most software is free.
Yahoo does have huge potential to leverage it’s brilliant Web 2.0 development to date (e.g. Flickr, Open Search APIs, etc), but only if they can find ways to make sure their huge internet footprint stays intact and users start to see and interact with Yahoo advertising. If Bartz can do this Yahoo’s prospects could improve significantly.
Disclosure: Long on YHOO