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After two years, the Yahoo acquistion spree is over

After buying every startup it could find in 2013 and 2014, the company hasn't bought any in 2015

Financial trends and news by Steven Loeb
May 1, 2015
Short URL: http://vator.tv/n/3d7b

We all knew it had to come to an end eventually, but it was fun while it lasted.

For a few years Yahoo was the unofficial acquisition king. The company, under the leadership of new CEO Marissa Mayer, went a little crazy with the buying of startups. In 2013 alone, it bought a total of 23 startups, getting to the point where I felt like I was writing about a new one almost every week. The majority of these purchases were acqui-hires, where Yahoo would shut down the company, poaching it for its team, rather than its tech.

Now, finally, it appears this trend has finally subsided, according to data out from CB Insights on Thursday. The research firm found that Yahoo's M&A dropped 38% year to year from 2013 to 2014, and that, since the start of 2015, the company has been quiet on the M&A front.

It even created a handy chart to show how quickly the acquisition spree fell off. In fact, to my surprise, Yahoo has not made a single acquisition this year; the last time it bought a company was when it bought photo app developer Cooliris all the way back in November of 2014.

Given that its number of acquistiions this year is a big fat zero, it shouldn't surprise you to learn that other companies, like Google, Facebook and Twitter, have all surpassed it. The trend was happening for a while though, as Google became the startup gobbler in 2014.

With Yahoo no longer buying up startups left and right, the question is: why? Did they simply run out of companies to buy?

The more likely answer is that Mayer simply could not justify the money that she was spending on all of these companies, not with Yahoo's financials going in the wrong direction and with shareholders openly calling for her head. Many shareholders believe that Yahoo's core business is currently undervalued, and are putting the blame for that on Mayer. 

Many of them seemed to be giving Mayer the benefit of the doubt for a while, especially given how much the company's stock had risen under her leadership... until the company had five quarters in a row of mounting losses, 

In its most recent quarterly earnings report, released earlier this week, Yahoo saw revenue of $1.2 billion, on EPS of 15 cents. Analysts had been expecteding it to earn $1.1 billion on 18 cents per share.

The truth is that Mayer did buy up many companies purely for their personnel, and does eventually have to show something for that. How much longer sharholders are going to give her to do that is an open question.

It should also be noted that not all of Mayer's purchases were acqui-hires; she also made a few mega-deals as well. That including buying Tumblr for $1.1 billion in 2013, buying Brightroll for $640 million, and buying flurry for $300 million.

(Image source: money.cnn.com)


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