A Look At Marissa Mayer’s YHOO M&A Spree

by Tom Taulli | December 6, 2013 3:31 pm

A Look At Marissa Mayer’s YHOO M&A Spree

After years of woe for investors, Yahoo (YHOO[1]) has been getting its mojo back, gaining an impressive 96% in 2013. By comparison, Facebook (FB[2]) stock — which has staged its own comeback — is only up 81%. So why the standout performance for YHOO stock?

yahoo logo A Look At Marissa Mayers YHOO M&A Spree[3]First of all, it helps that YHOO has a 24% stake in Alibaba, which is the largest ecommerce operator in China. The company is expected to launch an IPO next year, and it may fetch a valuation over $100 billion — great news for YHOO stock holders.

At the same time, YHOO CEO Marissa Mayer has brought pizazz back to the company. Hey, how many in Corporate America can pull off a story and photo shoot in Vanity Fair? Not many. But a key to her strategy is pulling off gutsy acquisitions, especially in the mobile space. After all, that tactic worked pretty well at her former company, Google (GOOG[4]).

So what are some of her notable deals for the past year? Let’s take a look:

YHOO Deals in 2013

December 3rd, Ptch: Ptch was started at the studios of DreamWorks Animation (DWA[5]). But it certainly had what Marissa is looking for: strong mobile chops. A year ago, Ptch launched a video app[6] that allowed for remixing, such as with cool music and other multimedia effects, although, YHOO has actually shutdown the app. The deal for Ptch is likely an acquire-hire, where the main reason for the transaction is to nab top-notch talent.

Mar 26, Summly: At the time of the transaction, Summly’s co-founder, Nick D’Aloisio, was a mere 17 years old, yet he was able to snag $30 million from YHOO[7]. His app, which had a good design, provided users with summaries of news stories, using licensed intellectual property from SRI International. The app didn’t really get much traction, though, with fewer than 1 million downloads. Analysts were unsure what to make of the Summly acquisition, except as a headline-grabbing move from YHOO.

May 20, Tumblr: In 2007, David Karp created Tumblr because he wanted to allow users to make microblogs. Six years later, Marissa Mayer acquired the company and wrote a Tumblr post about the decision[8]. She noted that the platform hosted 105 million blogs and got about 300 million monthly unique visitors, with about 120,000 signing up every day. Even better: More than half the users were using the mobile app. Again, this was a way to move YHOO deeper into the mobile space. According to Mayer: “We promise not to screw it up.”

May 23, PlayerScale: This deal got little attention, but it might have been the savviest of the bunch. PlayerScale operates a platform that allows game publishers to distribute, manage and collect payments for titles[9]. Launched a few years ago, the company now hosts more than 150 million users. PlayerScale allows game developers to offload the infrastructure, freeing up more time to devote to making better titles. Besides, when it comes to mobile apps, games still generate the bulk of revenues on the app stores. For Yahoo and YHOO stock investors, PlayerScale is a great, indirect play for those revenues.

Tom Taulli runs the InvestorPlace blog IPO Playbook[10]. He is also the author of High-Profit IPO Strategies[11]All About Commodities[12] and All About Short Selling[13]. Follow him on Twitter at @ttaulli[14]. As of this writing, he did not hold a position in any of the aforementioned securities.

Endnotes:
  1. YHOO: http://studio-5.financialcontent.com/investplace/quote?Symbol=YHOO
  2. FB: http://studio-5.financialcontent.com/investplace/quote?Symbol=FB
  3. [Image]: http://investorplace.com/wp-content/uploads/2013/09/yahoo_logo.jpg
  4. GOOG: http://studio-5.financialcontent.com/investplace/quote?Symbol=GOOG
  5. DWA: http://studio-5.financialcontent.com/investplace/quote?Symbol=DWA
  6. Ptch launched a video app: http://techcrunch.com/2013/12/03/yahoo-acquires-team-behind-dreamworks-animation-incubated-mobile-video-app-ptch/
  7. $30 million from YHOO: http://investorplace.com/ipo-playbook/summlys-30m-deal-good-for-the-kid-but-not-yahoo/#.UqH8ZcRDtQs
  8. Tumblr post about the decision: http://marissamayr.tumblr.com/post/50902274591/im-delighted-to-announce-that-weve-reached-an
  9. to distribute, manage and collect payments for titles: http://news.cnet.com/8301-1023_3-57585886-93/yahoos-at-it-again-with-gaming-platform-acquisition/
  10. IPO Playbook: http://investorplace.com/ipo-playbook/
  11. High-Profit IPO Strategies: http://goo.gl/TXQsz
  12. All About Commodities: http://goo.gl/FfP8R
  13. All About Short Selling: http://goo.gl/t5Jzb
  14. @ttaulli: https://twitter.com/ttaulli

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