Yahoo Acquires Tumblr
Yahoo! Inc. (YHOO: NASDAQ) announced on Monday, the purchase of Tumblr for $1.1
billion. The move is to expand Yahoo's user base, particularly among young
people as well as translating growth into more revenue from online ads. Yahoo
CEO Marissa Mayer vowed to keep Yahoo and Tumblr “focused on advertising that is
as good as the content itself and is seamless with the experience,” on a
conference call early Monday morning. According to Mayer on a conference call on
Monday morning, “this is obviously an exception” - noting that Yahoo's most
recent deals have been more in the “acqui-hire” category. “You only do an
acquisition of this size and scale if you find an exceptional company. and
Tumblr is that,” Mayer said on the call. Mayer is promising a hands-off approach
to the management of Tumblr. Tumblr is Yahoo’s first $1 billion acquisition
since the $1.6 billion deal to buy search ad firm Overture in July of 2003. The
deal is much smaller than the dot-com era deals in which Yahoo sucked up
GeoCities and Broadcast.com for $3.6 billion and $4.9 billion, respectively.
Yahoo CFO Ken Goldman said the company had nearly $5.4 billion cash on hand at
the end of Q1 and said the company has “ample cash resources” to continue its
existing stock buyback program. Yahoo made point in case on Monday that the size
of the Tumblr deal will not cause it pain financially. Shares of Yahoo were
higher by over 1% into after hour trading on Monday.
A new draft published last week by the Interior Department’s Bureau of Land
Management kept the requirement that operators disclose which chemicals they use
in fracking, but relaxed it somewhat. IDBLM maintained requirements that
operators improve assurances that fracking fluids do not contaminate groundwater
and confirm they have a water-management plan in place for handling fluids that
resurface. In a statement, IDBLM said the priority is “to continue to expand
safe and domestic energy production.” On industry-established FracFocus.org,
operators would self-report their activities only after wells have been fracked,
with exemptions for the protection of “trade secrets,” rather than disclosing
activity ahead of time. Nearly 90% of wells drilled in federal and tribal lands
use fracking and the current rules which are more than 30 years old, do not
cover many of the modern practices, per the IDBLM. Fracking commonly involves
using a mixture of water, sand and chemicals to blast apart oil and gas-bearing
rocks to extract hydrocarbons. Over the last decade, fracking has rapidly
evolved and now accounts for much of the new oil production in North America.
Cubist Pharmaceuticals Inc. (CBST: NASDAQ) shares soared higher during the last
45 minutes of trading on Monday by 8% to a new 52 week high. The move was a
result of news that U.S. District Court Judge Gregory M. Sleet ruled in favor of
Cubist in a Delaware court, where the pharmaceutical firm was defending itself
in a patent challenge from Hospira Inc. (HSP: NYSE) sought to market a generic
form of Cubicin, an injectable antibiotic used to treat skin infections,
expected to bring Cubist nearly $1 billion in sales for 2013. Cubist spokesman
Julie DiCarlo said, We’re pleased that the Court agreed with our interpretations
of the patent claim terms. The trial remains scheduled for February 2014, and we
have full confidence in the strength of our intellectual property rights. ”
National activity index for the Chicago Fed fell to negative 0.53 during April
with a three-month moving average at negative 0.04 from negative. The
three-month average of the index, which is a weighted average of 85 different
economic indicators, is designed so that a zero reading equals trend growth and
a reading below negative 0.70 indicates an increasing likelihood a recession has
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May 20, 2013