Yahoo! Inc. (NASDAQ:YHOO) CEO Marissa Mayer has defended the $1.1 billion the company paid for the blogging service Tumblr. The executive made the comments while speaking to CNBC earlier on Tuesday. Yahoo! Inc. (NASDAQ:YHOO) confirmed that it had agreed to acquire Tumblr last weekend.
In the interview on CNBC, Mayer said that the acquisition of Tumblr was an important part of “enhancing our growth story.” The $1.1 billion price tag was worth it for Yahoo! Inc. (NASDAQ:YHOO) to help the firm “move faster as a company.” Yahoo has had a difficult time keeping up with web trends in recent years, and optimists are hoping that the acquisition of Tumblr is a timely one, and one that can help the firm grow.
Yahoo Acquisition:
Mayer made some important comments about the way she intends Tumblr to operate in Yahoo. She told CNBC that the blogging property would be independently run inside of Yahoo! Inc. (NASDAQ:YHOO), rather than becoming a part of the company’s core business. According to Mayer, this set up will allow the site to continue operating as successfully as it has done in recent years in the hope that it continues to grow on the same path.
The Yahoo! Inc. (NASDAQ:YHOO) acquisition doubles the company’s user base according to Mayer, though that means little in terms of revenue, because Tumblr doesn’t make any money just yet. If Yahoo can drive users towards its core business from the site, or monetize Tumblr itself, it could see an appreciable increase in its revenue.
Tumblr has come at a huge price tag, however, and it doesn’t do anything for Yahoo! Inc. (NASDAQ:YHOO) on day one. Yahoo has made mistakes in acquisitions before, and some investors are nervous about the company’s bold strategy. Mayer has impressed many at the company, however, and some investors seem willing to trust in her vision at the expense of a little security.
On Monday, the first day of trading after Yahoo! Inc. (NASDAQ:YHOO) announced the deal, stock in the company trended up a fraction. On today’s market the firm’s shares are seeing stronger momentum, with units up more than 1.5 percent to $27.04 at time of writing.
So far this year, stock in Yahoo has benefited from a rally in the market and belief in the changes being made by Mayer. Since January 1, Yahoo stock is up 36 percent.
