Yahoo Approves $1.1B Deal for Tumblr

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By Ingrid Lunden

Yahoo has now officially confirmed that it is buying blogging platform Tumblr for $1.1 billion, confirming speculation that started last week. It says it will keep it as an independent company, with founder David Karp at the helm as CEO. "The product, service and brand will continue to be defined and developed separately with the same Tumblr irreverence, wit, and commitment to empower creators," it writes.

With a lot of negative comments coming in from Tumblr users in lead-up to the deal, and some competitors claiming that they're witnessing a kind of exodus from Tumblr as a result, Karp has also weighed in with his own announcement about the deal, emphasizing the same independence line: "We're not turning purple," he wrote:

"We're not turning purple. Our headquarters isn't moving. Our team isn't changing. Our roadmap isn't changing. And our mission -- to empower creators to make their best work and get it in front of the audience they deserve -- certainly isn't changing."

He also points out that Tumblr, joining up with the "original Internet company," will be getting more resources to create the "ultimate creative canvas." Some users have complained about certain features around the site, such as how video works, so the implication here is that areas like this will be addressed faster from now on, but -- again -- in a way that "doesn't compromise the community and product we love."

More to come. Yahoo's release below.

SUNNYVALE, Calif. & NEW YORK -- Yahoo! Inc. (NASDAQ: YHOO) and Tumblr announced today that they have reached a definitive agreement for Yahoo! to acquire Tumblr.

Per the agreement and our promise not to screw it up, Tumblr will be independently operated as a separate business. David Karp will remain CEO. The product, service and brand will continue to be defined and developed separately with the same Tumblr irreverence, wit, and commitment to empower creators.

With more than 300 million monthly unique visitors and 120,000 signups every day, Tumblr is one of the fastest-growing media networks in the world. Tumblr sees 900 posts per second (!) and 24 billion minutes spent on site each month. On mobile, more than half of Tumblr's users are using the mobile app and do an average of 7 sessions per day. Its tremendous popularity and engagement among creators, curators and audiences of all ages brings a significant new community of users to the Yahoo! network. The combination of Tumblr+Yahoo! is expected to grow Yahoo!'s audience by 50 percent to more than a billion monthly visitors, and to grow traffic by approximately 20 percent.

The deal offers unique opportunities for both companies. Tumblr can deploy Yahoo!'s personalization technology and search infrastructure to help its users discover creators, bloggers, and content they'll love. In turn, Tumblr brings 50 billion blog posts (and 75 million more arriving each day) to Yahoo!'s media network and search experiences. The two companies will also work together to create advertising opportunities that are seamless and enhance the user experience.

Total consideration is approximately $1.1 billion, substantially all of which is payable in cash.

"Tumblr is redefining creative expression online," said Yahoo! CEO Marissa Mayer. "On many levels, Tumblr and Yahoo! couldn't be more different, but, at the same time, they couldn't be more complementary. Yahoo is the Internet's original media network. Tumblr is the Internet's fastest-growing media frenzy. Both companies are homes for brands – established and emerging. And, fundamentally, Tumblr and Yahoo! are both all about users, design, and finding surprise and inspiration amidst the everyday."

"I've long held the view that in all things art and design, you can feel the spirit and demeanor of the creator. That's why it was no surprise to me that David Karp is one of the nicest, most empathetic people I've ever met. He's also one of the most perceptive, capable entrepreneurs I've ever worked with," continued Mayer. "David's respect for Tumblr's community of creators is awesome. I'm absolutely delighted to have him join our team."

David Karp, CEO of Tumblr, addressed the Tumblr community, "Our team isn't changing. Our roadmap isn't changing. And our mission - to empower creators to make their best work and get it in front of the audience they deserve - certainly isn't changing. But we're elated to have the support of Yahoo! and their team who share our dream to make the Internet the ultimate creative canvas. Tumblr gets better faster with more resources to draw from."

The transaction, which is subject to customary closing conditions, is expected to close in the second half of the year.

Conference Call

Yahoo! will host a conference call at 9:00 a.m. Eastern Time today to discuss this announcement. A live webcast of the conference call can be accessed through the company's Investor Relations website at In addition, an archive of the webcast will be accessible for 90 days through the same link.

About Tumblr

Tumblr is a media network powered by an army of independent creators and home to an audience of more than 300 million unique visitors. Founded by David Karp in 2007, Tumblr is headquartered in New York City.

About Yahoo!

Yahoo! is focused on making the world's daily habits inspiring and entertaining. By creating highly personalized experiences for our users, we keep people connected to what matters most to them, across devices and around the world. In turn, we create value for advertisers by connecting them with the audiences that build their businesses. Yahoo! is headquartered in Sunnyvale, CA, and has offices located throughout the Americas, Asia Pacific (APAC) and the Europe, Middle East and Africa (EMEA) regions. For more information, visit the pressroom ( or the company's blog (

This press release contains forward-looking statements that involve risks and uncertainties concerning Yahoo!'s proposed acquisition of Tumblr (including without limitation the statements contained in the quotations from management in this press release), as well as Yahoo!'s strategic and operational plans. Actual events or results may differ materially from those described in this press release due to a number of risks and uncertainties. The potential risks and uncertainties include, among others, the possibility that the transaction will not close or that the closing may be delayed; and that the anticipated benefits to Yahoo!, including projected growth in audience and traffic, and benefits to users and advertisers may not be realized. More information about potential factors that could affect Yahoo!'s business and financial results is included under the captions, "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2012 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, which are on file with the Securities and Exchange Commission ("SEC") and available at the SEC's website at

CEO Flameouts
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Yahoo Approves $1.1B Deal for Tumblr

Ron Johnson's short tenure as J.C. Penney's (JCP) CEO will go down as one of the biggest flameouts in corporate America. The former Apple executive was hailed as a big thinker when he was hired by the ailing department store chain, but his radical moves ended up alienating shoppers, sent sales plunging, and left the company in even worse shape.

He lasted 17 months.

But Johnson isn't the only executive to be pushed out after failing to live up to big expectations. Here's a look at some of the other major ousters in recent times.

The Internet company Yahoo! (YHOO) hired technology veteran Bartz in 2009, with the goal of bringing in a no-nonsense leader who would develop a clear vision. Bartz shook up Yahoo's management and instituted a cost-cutting program that helped boost the company's earnings. But revenue failed to grow even as the online ad market expanded at a rapid clip.
Bartz, known for her very direct approach and sometimes-colorful language, stressed that a turnaround would take time and pleaded for patience from shareholders, pointing out that it took Steve Jobs years to revive Apple after his return in 1997.

But after more than 2½ years of financial lethargy, Yahoo ousted Bartz in 2011. The company's chairman fired her over the phone, according to an email Bartz sent from her iPad that was obtained by the All Things D technology blog at the time.
When HP (HPQ) hired Apotheker in November 2010, it was seen as an aggressive push by the company into the software business. But many analysts mocked the choice, considering that Apotheker had just been forced out of his previous job as CEO of German business software maker SAP AG following ill-timed price hikes and widespread employee dissatisfaction.

Apotheker was supposed to be a steady hand to steer HP out of a tumultuous time but his strategic decisions were drastic and did little to inspire confidence. He was doomed by disappointing earnings and a fumbled announcement that the company's personal computer division was for sale. Even as he struggled, Apotheker complained that HP suffered from years of under-investment by his predecessor, Mark Hurd.

Apotheker also was one of the chief backers of HP's acquisition of British software company Autonomy Corp. HP paid $10 billion for Autonomy, but later said it was deceived by improper accounting and overpaid.

After just 11 months, Apotheker was forced out and replaced by former eBay CEO Meg Whitman.

Conaway had won many fans on Wall Street as the No. 2 executive at CVS (CVS), where he helped build the drugstore chain into an industry powerhouse. When he was hired by Kmart (SHLD) in 2000, Conaway inherited a company with a long list of entrenched problems, including outdated technology and drab stores.

Analysts say Conaway made strategic mistakes, such as trying to compete with Walmart on price and focusing on exceedingly cheap groceries rather than on its exclusive Martha Stewart brand. In early 2002, Kmart filed for Chapter 11 bankruptcy, and Conaway resigned soon after.

Conaway also faced accusations that he misled investors about Kmart's financial problems before the bankruptcy filing.

The bankruptcy led to Kmart coming under the control of Edward Lampert, a billionaire investor. Lampert later engineered the acquisition of Sears, Roebuck & Co., combining the companies into Sears Holding Corp.

Nardelli was hailed as an outsider who could help save the U.S. auto industry by private equity firm Cerberus Capital Management, which installed him as the head of Chrysler in August 2007. But Nardelli, who spent most of his career in the executive ranks at GE before leaving to run Home Depot, had no experience in the complex business of auto manufacturing, and it showed.

Instead of investing to improve Chrysler's substandard lineup, Nardelli focused on cutting jobs and closing plants. He alienated suppliers and dealers, who revolted when Chrysler announced plans to close dealerships and stopped financing leases. And he was gaffe-prone, at one point mistakenly telling Wisconsin's governor that an engine plant in his state would remain open.

By the time the financial crisis hit in the fall of 2008, Chrysler was in serious trouble. Nardelli testified before Congress and obtained loans to help the company survive, but it was too late. Chrysler filed for bankruptcy in April 2009. When Chrysler exited bankruptcy that June, Nardelli was out and Fiat CEO Sergio Marchionne took over.

Grocery store operator Supervalu brought in Herkert in 2009 with the hopes that the high-ranking former Walmart executive could spark a turnaround for its struggling fortunes. Supervalu (SVU), which was one of the country's biggest grocery store operators at the time, was struggling with growing competition at big-box retailers, drugstores and dollar stores.

Under his tenure, Herkert tried positioning Supervalu as a neighborhood store and emphasized low prices. But sales and profitability kept sliding and last summer, the company suspended its dividend and announced plans to potentially put itself up for sale. A few weeks later, Herkert was out.

In January, the company announced that it was selling five of its major chains and focusing on its Save-A-Lot discount stores and smaller regional chains.

Rollins joined Dell (DELL) in 1996 and held a variety of roles before becoming CEO in 2004, including chief operating officer, vice chairman and president of Dell Americas.

The company had been struggling with a market glut of low-cost, low-profit PCs and weaker-than-anticipated sales of its pricier, more lucrative desktops and notebooks. In 2006, it lost its No. 1 position in the industry to rival Hewlett-Packard Co. In addition to disappointing earnings, Dell had recalled more than 4 million potentially flammable notebook batteries made by Sony in August 2006. The company's accounting practices had come under federal scrutiny as well.

The key parallel between Rollins and Penney's Johnson may have been overpromising. Rollins took the reins of a company doing a little more than $40 billion a year in business and painted pictures of bumping that to $80 billion -- which Dell has still not approached.

Rollins stepped down in early 2007. Founder Michael Dell took the CEO job back.
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