Yahoo Hints That $1 Billion Tumblr Acquisition Was Mostly Wasted Money
(Reuters) – Yahoo said it may have to write down the goodwill value of Tumblr, more than two years after the web pioneer spent $1.1 billion to buy the microblogging site.
Yahoo said earlier in the month it took a $230 million impairment charge related to Tumblr and was considering strategic alternatives for its core internet business.
“It is reasonably possible that changes in judgments … could cause the company to consider some portion or all of the remaining goodwill of the Tumblr reporting unit to become impaired,” Yahoo said in a regulatory filing on Monday.
The deal for Tumblr was then seen as a bold bet by Yahoo CEO Marissa Mayer to revitalize the company by co-opting a Web property with strong visitor traffic but little revenue.
Yahoo said on Friday it would take pretax charges of $64 million to $78 million, mostly in the first quarter of 2016, due to job cuts and other restructuring moves.
For more about Yahoo, watch:
Of the total, $40 million to $48 million would be for severance pay and related cash expenditures, the company said in a filing.
Yahoo has said it would reduce workforce by 15% by the end of 2016 and close offices in Dubai, Mexico City, Buenos Aires, Madrid and Milan.
The company’s shares (YHOO) closed up 1.3% at $31.79 on Monday and were largely unchanged in extended trading.