Tumblr isn't doing as well as Yahoo expected

Yahoo reduced its valuation by $230 million.

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Mariella Moon
February 3rd, 2016
Tumblr isn't doing as well as Yahoo expected

Yahoo had high hopes for Tumblr when it bought the blogging platform for $1.1 billion in 2013, but it hasn't lived up to its expectations. The troubled company has lowered its valuation to $760 million, down $230 million from its previous $990 million value (Yahoo only snapped up Tumblr for over a billion due to its liabilities). Marissa Mayer and her colleagues expected the startup to boost its userbase to a billion. While that did eventually happen over a year after the acquisition, the number was called into question, as the company used a new methodology to measure its audience across devices.

They also believed that Tumblr would earn them $100 million in revenue in 2015. Mayer admitted during the company's latest earnings call that it wasn't able to reach that goal, because they "experienced a slower ramp in monetization than [they] initially expected." This development certainly makes it sound like Yahoo overpaid for the website a few years ago.

The blogging platform is only one of the corporate units that had to be revalued, though. In all, the company is taking a $4.5 billion charge after writing down the values of other properties. The once veritable Google rival is mired in such deep financial troubles that it's laying off thousands of employees and closing five offices. Mayer even said during the earnings call that they're considering "qualified strategic proposals," which lends credibility to earlier reports that Yahoo is thinking of selling itself off.

[Image credit: Scott Schiller/Flickr]

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