Yahoo Revamps Flickr and Acquires Tumblr all in One Day
Monday was a big day for Yahoo! (NASDAQ: YHOO).
First, it announced that it was buying social blogging platform, Tumblr for $1.1 billion in an all cash deal. Investors would agree that a billion dollar acquisition is plenty of news for one day but Yahoo! had more to announce.
Yahoo CEO Marissa Mayer announced a complete rethink of it’s 2005 acquisition, Flickr. Photo sharing site Flickr was purchased by Yahoo for $35 million but has lost market share to rival Instagram since being purchased by Facebook (NASDAQ: FB).
Monday evening, Mayer announced the Flickr would give users one terabyte of storage space for each user. Additionally, a new, more intuitive user interface was unveiled.
One terabyte, like anything in the trillions, is hard to put into perspective, but according to a Yahoo blog post, that’s enough space to store more than 500,000 images.
Mayer’s vision for Flickr is to “make it cool again.” The site had become full of text which made images look dull and boring. The new layout shows images in full resolution and can adapt to any size screen and all mobile devices. The new website focuses on larger images with much less text.
The new site will still feature ads but users can reportedly pay $49.95 per year to access Flickr without having to read about the latest innovations in hair coloring.
But there are some on Wall Street that aren’t impressed with either of Monday’s announcements. They note that Flickr had become something of that neglected home in an otherwise nice neighborhood. The internet is full of vibrant, interactive photo sharing sites but somehow, Flickr, owned and operated by one of the foremost tech companies, was neglected.
Investors are criticizing Yahoo’s acquisition of Tumblr saying that the same thing could happen with this site. The difference is that the price tag for Tumblr is much larger.
Mayer answered those criticisms with a remark that you would expect from a thirty-something CEO—she promised, "not to screw it up." Maybe not the most dignified or grammatically correct word choice but refreshingly blunt and committal.
Even the Yahoo naysayers have to concede that the company is showing signs of life. Its stock is up 44 percent in the past six months and increasingly, analysts are calling for the stock to reach the $30 level. That’s a significant price appreciation from the current, $22.70 level.
Disclosure: At the time of this writing Tim Parker had no position in the equities mentioned.
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