Yahoo! Inc. (YHOO): Big Deals, Big Steals

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Unlike your old modem, you probably haven’t heard much noise from AOL, Inc. (NYSE:AOL) since its merger with Time Warner Inc. (NYSE:TWX) back in 2000. AOL has once again become an independent company after being spun off in 2009. With decreasing revenues and a brand name most believe to be dead, the company’s future appeared bleak. In an attempt to right its sinking ship, AOL, Inc. (NYSE:AOL) purchased The Huffington Post for $315 million dollars. While the company spent nearly half of its available cash to purchase the media juggernaut, it looks like this deal was a long-term bargain for AOL. AOL wisely kept the Huffington Post brand name and has slowly expanded its services. With hundreds of new properties to advertise on, the Huffington Post has resurrected AOL, Inc. (NYSE:AOL) from near extinction.

Yahoo! Inc. (YHOO): Big Deals, Big Steals

YHOO Total Return Price data by YCharts

The Trend is your friend

The pattern is clear, and the message to Yahoo! Inc. (NASDAQ:YHOO) is simple: let Tumblr grow on its own. Help it, guide it, and very slowly integrate it. Tumblr has done something right, so don’t tamper with its formula for success. Tumblr may be one of Yahoo!’s last chances for a “web redemption.” Paying a premium for this company was a risk, but if the company can successfully attract Tumblr’s younger users then this deal could be a steal. If Yahoo! Inc. (NASDAQ:YHOO) can handle this acquisition well and recruit a younger demographic, we might just see this ugly duckling of the Internet turn into a swan.

Article by Joshua Sauer, edited by Chris Marasco. Neither has a position in any stocks mentioned. The Motley Fool recommends Facebook Inc (NASDAQ:FB) and Google. The Motley Fool owns shares of Facebook, Google Inc (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT).

The article Yahoo!: Big Deals, Big Steals originally appeared on Fool.com.

Marie is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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