Yahoo! Inc. (YHOO): Making A Clean Sweep

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On the social media side, it’s hard not to compare the Tumblr acquisition to Facebook Inc (NASDAQ:FB)‘s purchase of Instagram last year (also for about $1 billion). While Facebook Inc (NASDAQ:FB) is the social media giant, its purchase of Instagram showed that it still fears competitors and needs to adapt to shifting user preferences. Yahoo! may not be as influential as Facebook Inc (NASDAQ:FB), but it does realize that buying up popular content creation tools can keep a company relevant.

In the end, it’ll be Tumblr’s revenue that will be the measuring stick for Yahoo! Inc. (NASDAQ:YHOO) stock investors. Popularity is great, but Yahoo! needs to make money from Tumblr. If the company fails to do that, it will not only have wasted $1 billion, it will have wasted time on yet another failed acquisition.

The article Buying Yahoo! Stock? Keep an Eye on This originally appeared on Fool.com and is written by Chris Neiger.

Fool contributor Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Facebook and Google. The Motley Fool owns shares of Facebook and Google.

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