Yahoo! Inc. (NASDAQ:YHOO) has announced that it’s considering reducing the goodwill of its micro-blogging website, Tumblr. Yahoo had initially bought the website at a price of $1.1 billion, two years ago. Added to this, the company also announced that it was considering alternatives to its core internet business. The move would be in favor of the company, since it is valued at a total of $28 billion, despite a $30 billion stake in Alibaba and Yahoo Japan.
Yahoo’s core business is valued at approximately $1 billion. The company’s main problem has been a series of bad business decisions that the company made since 1997. As per reports, Yahoo has acquired a total of 120 smaller companies, in order to fuel its growth. Added to this, the company has spent a total of $17 billion in acquisition costs. However, the gains from these companies have not justified Yahoo’s decisions.
Recently, Yahoo stated that it would be undertaking $230 million in impairment charges, with respect to Tumblr. In a statement the company also added that changes in judgments could lead to further impairment of Tumblr. The move to acquire Tumblr was initially seen as a bold move, since it had large visitor traffic, but was producing little revenue. However, the deal has not worked out for Yahoo thus far.
After coming under pressure from investors, the company has announced that it would reduce its workforce by 15%, during 2016. The charges associated with the layoffs amount to an estimate of $64-78 million. The amount also includes the costs associated with the closing of Yahoo offices in Dubai and Mexico City amongst other locations. Added to this, the company has acquired yet another social platform, Polyvore, which the company states that it is still integrating. Whether the decision would go in favor or against Yahoo’s interests remains to be seen.
Yahoo! Inc. (NASDAQ:YHOO) had a trade volume of 21.17 million and gained 1.34% during the February 29 session, to reach a close at $31.79.