Faced with sagging ad sales, Yahoo has decided to keep trying to same failing strategy: gobbling up fledgling startups to reinvigorate the aging behemoth. An activist investor already slammed this approach as a money-burning fuck up. But CEO Marissa Mayer is undeterred. She plans to squander profits from Yahoo's stake in Alibaba on more youthful startups.
Besides the Tumblr deal, Yahoo is rumored to have spent $20 million investing in Snapchat—another company trendy with teens that can't turn a profit. But according to the Wall Street Journal, Mayer has bigger plans:
Yahoo is considering acquiring one or more large technology startups with some of the $5.8 billion it made from the initial public offering of Alibaba Group Holding Ltd. , according to people who have discussed possible deals with Yahoo representatives.
A large acquisition could help Ms. Mayer generate significant new streams of revenue at Yahoo, where sales have declined in four out of the past five quarters.
The report didn't float any names of potential purchases. But it did make clear that investors are not to be happy about the strategy: activist investor Starboard previously asked to Mayer to stop buying up startups, noting that Yahoo's past acquisitions are "losing a considerable amount of money."