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The Yahoo board has approved a deal to pay $1.1 billion in cash for Tumblr

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Re: The Yahoo board has approved a deal to pay $1.1 billion in cash for Tumblr

#161

Post by raylu »

seiji wrote: post #132
icebraining wrote: post #130

Earlier quoted context omitted.

Frankly, I don't get your position. If you believe that price should be determined by supply and demand based on perceived value, like it mostly is in these cases, then there's no exploitation. If you believe that price should be attributed based on Labor expended, then the Yahoo! workers are already extremely disproportionately paid relative to the average worker, so it makes no sense for them to feel exploited. How…

How exactly are the Yahoo! workers exploited? I think that's between the employee and their own view of the world. If you worked at Yahoo for six years doing something, anything, and then Yahoo buys a six year old company run by a 26 year old for a billion dollars — what were you doing the past six years? Couldn't it have been you? Why not? Every computer person employed by a company isn't generating a million dollar…

On the off-chance this is not a troll,

> but most could if they were pointed in the right direction

Also, I could make a killing investing in this here penny stock...

Re: The Yahoo board has approved a deal to pay $1.1 billion in cash for Tumblr

#162

Post by adventured »

tnuc wrote: post #155
orangethirty wrote: post #115

A business without a proper model, lack of revenue, losing money, fighting off pornography and spammers is worth 1.1 billion in cash to Yahoo. The users will flee, they always do. The engineering dept. will be hired out, it always is. All that Yahoo will have is a domain, a database filled with cats and naked people, and a real problem on its hands. Bad move, Yahoo. The way to re-build Yahoo is not to buy zombie busi…

What you are describing sounds like what happened to GeoCities.

Tumblr is GeoCities, circa 2010. And that's why Yahoo purchased them of course. Nothing has changed about the nature of what Yahoo is. The only thing Mayer is doing is collecting a new group of properties to replace the stagnant old ones. It's not brilliant and it won't get the earnings flowing.

Re: The Yahoo board has approved a deal to pay $1.1 billion in cash for Tumblr

#163

Post by mikeash »

ISL wrote: post #96
gnok wrote: post #76

Earlier quoted context omitted.

I disagree. We don't know what Yahoo wants to do with Tumblr. All we have are rumors, a WSJ report and tons of idle speculation. Without knowing what the intended end game is, I don't see how we can call the acquisition a "success" or "failure", much less the CEO's. I also don't agree that "a sign of progress" is "making it succeed in the long run". Google is no genius with large acquisitions either. Motorola and Blo…

To know that Motorola was a poor acquisition, you'd need to know what would have happened if Google hadn't done it. Defensive/preventative decisions are sometimes undervalued.

By that logic, no decision whatsoever can be analyzed at all.

Re: The Yahoo board has approved a deal to pay $1.1 billion in cash for Tumblr

#164

Post by seiji »

jiggy2011 wrote: post #159
seiji wrote: post #132

Earlier quoted context omitted.

How exactly are the Yahoo! workers exploited? I think that's between the employee and their own view of the world. If you worked at Yahoo for six years doing something, anything, and then Yahoo buys a six year old company run by a 26 year old for a billion dollars — what were you doing the past six years? Couldn't it have been you? Why not? Every computer person employed by a company isn't generating a million dollar…

There's no foolproof way to know what will generate value ahead of time. Sometimes in order to use their skills to generate value a developer requires resources ahead of time that only a large company can provide. If you work on a failed project as an employee, then at least you got paid a salary during that time. As a startup founder you walk away with nothing.

As a startup founder you walk away with nothing.

That's kinda the problem these days. Failed startups have social connections making founders millionaires even when their venture was worthless. Some startups (not in the tumblr case) are essentially projects where you show the world Hey I Can Do Stuff then you get a few million dollars as a hiring bonus.

Re: The Yahoo board has approved a deal to pay $1.1 billion in cash for Tumblr

#165

Post by madaxe »

This just in: Internet giant purchases consumer web app with no revenue streams and no profits.

Swear I've read this story a hundred times in the last decade. Has there been a single acquisition of this nature which has resulted in a profitable outcome for anyone, except for the VCs?

Re: The Yahoo board has approved a deal to pay $1.1 billion in cash for Tumblr

#166

Post by burgreblast »

return0 wrote: post #122
orangethirty wrote: post #115

A business without a proper model, lack of revenue, losing money, fighting off pornography and spammers is worth 1.1 billion in cash to Yahoo. The users will flee, they always do. The engineering dept. will be hired out, it always is. All that Yahoo will have is a domain, a database filled with cats and naked people, and a real problem on its hands. Bad move, Yahoo. The way to re-build Yahoo is not to buy zombie busi…

As always? is this the rule? Given precedents of instagram etc, it doesn't seem like an improbable price. However, how is tumblr fighting porn? I thought they actively encouraged it. It's a big part of tumblr for sure (and big part of the value yahoo pays for).

Instagram was growing rapidly and threatening FB as the place to share pics. Tumbler is declining.

Re: The Yahoo board has approved a deal to pay $1.1 billion in cash for Tumblr

#167

Post by riggins »

pseut wrote: post #112
riggins wrote: post #72

Earlier quoted context omitted.

Cash is much more valuable than stock. this claim is indefensible. It depends on the valuation of the company. For example, at IPO MSFT had 25M shares outstanding @ $21, total market cap of $525M. Obviously 5M shares of MSFT stock (market value of $100M) in 1986 was worth far more than $100M of cash. On the flip side, $100M in cash would have been worth more than $100M in Groupon stock (at the IPO valuation).

More valuable than stock ex ante, obviously not always ex post. Since the price of a publicly traded stock reflects expectations about future valuations, but also has some additional risk, the cash is usually going to be valued more. "indefensible" is too strong, "not true in every single possible case" might be more accurate. Even then, your examples aren't that helpful; an example of a publicly traded company whose…

Cash is much more valuable than stock. Any CEO worth their salt would ALWAYS issue stock and never cash

Here's the entire quote. Steven2012's claim is that cash is always more valuable than stock. He's dead wrong. If you don't believe me, maybe you'll believe Buffett on how Dexter Shoes was one of his worst deals ever.

http://www.reuters.com/article/2008/03/01/us-berkshire-buffe...

What I had assessed as durable competitive advantage vanished within a few years," Buffett wrote on Friday. "By using Berkshire stock, I compounded this error hugely. That move made the cost to Berkshire shareholders not $400 million, but rather $3.5 billion. In essence, I gave away 1.6 percent of a wonderful business -- one now valued at $220 billion -- to buy a worthless business."

here's a more general discussion from Buffett on cash versus stock

http://1nvestments.blogspot.com/2012/09/buffett-using-cash-v...

Instead, our problem has been that we own a truly marvelous collection of businesses, which means that trading away a portion of them for something new almost never makes sense. When we issue shares in a merger, we reduce your ownership in all of our businesses -- partly-owned companies such as Coca-Cola, Gillette and American Express, and all of our terrific operating companies as well. An example from sports will illustrate the difficulty we face: For a baseball team, acquiring a player who can be expected to bat .350 is almost always a wonderful event -- except when the team must trade a .380 hitter to make the deal.

Because our roster is filled with .380 hitters, we have tried to pay cash for acquisitions, and here our record has been far better.

Re: The Yahoo board has approved a deal to pay $1.1 billion in cash for Tumblr

#168

Post by burgreblast »

jusben1369 wrote: post #78
pkmehta wrote: post #47

Earlier quoted context omitted.

Can someone explain to me why you spend $1.1B on this if the company was running out of cash, had investors skittish about funding a new round and there were no competing bids. Why didn't Yahoo just let them get desperate and buy them then? With an all-cash deal, it seems they're less interested in the team than the platform so seems they could have picked that up in a few months for significantly less. What am I mis…

One must never look at this deal based on the acquired's metrics and dynamics. One must look at this based on the impact of the acquirer. Instagram was worth $1 billion as it was potentially a $10 billion reduction in FB's valuation at IPO with this threat hanging out there. Tumblr is worth a billion because of the strategic value to Yahoo. In this particular case Yahoo can close massive gaps in age demographics and…

>Tumblr was discussing ad revenue of $100 mil this year.

But weren't there other reports that they were going to hit 15M instead? Whoops. If they had 100M revenue, they wouldn't me needing to raise more cash; their burn is far smaller.

Re: The Yahoo board has approved a deal to pay $1.1 billion in cash for Tumblr

#169

Post by pseut »

riggins wrote: post #167
pseut wrote: post #112

Earlier quoted context omitted.

More valuable than stock ex ante, obviously not always ex post. Since the price of a publicly traded stock reflects expectations about future valuations, but also has some additional risk, the cash is usually going to be valued more. "indefensible" is too strong, "not true in every single possible case" might be more accurate. Even then, your examples aren't that helpful; an example of a publicly traded company whose…

Cash is much more valuable than stock. Any CEO worth their salt would ALWAYS issue stock and never cash Here's the entire quote. Steven2012's claim is that cash is always more valuable than stock. He's dead wrong. If you don't believe me, maybe you'll believe Buffett on how Dexter Shoes was one of his worst deals ever. http://www.reuters.com/article/2008/03/01/us-berkshire-buffe... What I had assessed as durable comp…

That's a better example, thanks for sharing it.

Re: The Yahoo board has approved a deal to pay $1.1 billion in cash for Tumblr

#170

Post by georgemcbay »

gnok wrote: post #95
zaidf wrote: post #82

Earlier quoted context omitted.

Google is a genius at acquisitions IMO. To qualify as a genius you don't need a 100% of acquisitions to work out. You do need a few to work out tremendously. Google has those. Meanwhile, what's the last yahoo acquisition that didn't turn into disappointment soon after the acquisition? We can go back 15 years and be hard-pressed to find one. On the other hand there are plenty of disaster acquisitions including broadca…

I don't mean to imply that Yahoo is more successful than Google at acquisitions (We know that isn't the case). I just don't think Google is a good benchmark for acquisitions. I think they as good or as bad as Yahoo. I think Yahoo's problem with acquisitions has been that they are moderately successful initially and then drift away over time. ViaWeb, GeoCities, Musicmatch Jukebox, Konfabulator, delicious and Ludicorp…

Konfabulator is still (unfortunately) somewhat still around in the form of Yahoo Widgets for Connected TVs, a platform I have had the misfortune of working with in the past. But I suspect this too will soon be dead as any interest that still exists in this area has already shifted to Google TV.
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