The honeymoon may be over for Yahoo! CEO Marissa Mayer. While her streak of beating earnings estimates remained intact, investors focused on problems with the company's core business and promptly punished the stock. Yet Mayer promised that one strategy she has focused on in the past year
yahoo stock price
- Yahoo-Tumblr Deal a Hail Mary Pass That May Never Pay Off
- More Reasons to Avoid Yahoo (Nasdaq: YHOO) Stock
The Yahoo-Tumblr deal is a $1.1 billion gamble aimed at rejuvenating a stagnating business, but is more likely to end up a costly mistake.
The deal, announced today (Monday), is by far Yahoo CEO Marissa Mayer's biggest - and riskiest - acquisition yet.
Yahoo! Inc. (Nasdaq: YHOO) wanted access to Tumblr's 117 million users, most of them teens and young adults, to give it a beachhead into the ever-more important world of social media.
Tumblr has grown rapidly by making it easy not only to create blogs, but for Tumblr users to follow and share one another's posts.
But Tumblr, like so many other social media companies, is not exactly a money machine. Analysts estimate the company's 2012 revenue was just $13 million, making it a pricey acquisition indeed.
Yahoo, once revered as a web pioneer, has been stunted and dwarfed by those who followed in its footsteps.
The storied Internet content company has been upset by an increasing number of competitors like search engine behemoth Google Inc. (Nasdaq: GOOG) and social networking giant Facebook Inc. (Nasdaq: FB), and been wounded by waning ad sales.
Yahoo also is very late to the game in the battle for the mobile space, currently the biggest area of growth for the industry.
And then there is the question of diminishing revenue, declining earnings and slumping stock price.
Revenue fell by more than a fifth last year. Yahoo's stock price has slipped 17% over the past year, and 50% over the past five.
"Yahoo just can't get its act together," Money Morning tech guru Michael A. Robinson warned in January, naming Yahoo a "tech stock to avoid" in 2012. "While key executives were napping, Google burst on the scene a decade ago and rewrote the rules of web search and advertising. Portals like Yahoo never regained their traction."
As Yahoo's struggles continued, CEO Carol Bartz was recently let go with a phone call in September. In January, former PayPal president Scott Thompson was brought in as Bartz's successor.
And now the latest replacement may soon be replaced himself.