H4cked Off: do Yahoo's Tumblr figures really add up?

Or would Mayer's time be better spent drunkenly bidding for Doctor Who memorabilia on eBay instead?

There is a facile presumption, when big money is involved, that the people staking the cash must be super-clever. Yet the opposite is invariably true, especially when one-time web leader Yahoo is involved.

That is why the near-universal approval of its $1.1bn acquisition of porn-hosting website Tumblr (which also has some legitimate stuff tacked onto the side) is altogether more of a mystery.

To make this mystery even murkier, Yahoo’s super-CEO Marissa Mayer has promised to leave it well alone because Tumblr’s goodness-knows-how-many users prefer it that way.

It remains to be seen how much that promise is worth.

After grubbing up $120m in venture funding over six or so years and promising revenues of $100m last year, it actually turned over just $13m. During its last financing round, Tumblr was valued at the fantasy figure of $800m, yet was reportedly just months away from running out of cash.

Has Yahoo really, therefore, driven a particularly hard bargain, paying a 37.5 per cent premium doesn’t sound like smart business for Yahoo or bode well for Mayer’s transformative powers. Aren’t execs supposed to try to beat the price down, not up, in such circumstances?

Quite remarkably, Yahoo’s patient shareholders have inexplicably let the company acquire 76 other companies in its short life, most of which have been total clusterbombs.

Who can forget Broadcast.com, bought by Yahoo for $5.7bn back in 1999? Or what about Geocities, the third most popular website in the world when it was bought for $3.57bn in 1999, but closed down ten years later after Yahoo had chased off all its pesky users, with just the Japanese operation spared.

Yahoo has lashed out $17bn or more buying 77 assorted bits-and-bobs of corporate tat over the years, including Tumblr, which for a company registering annual revenues down by one-fifth in the past two years to a shade under $5bn seems a bit of a poor show.

It might have done better if its various CEOs had spent their days drunkenly bidding for Doctor Who memorabilia on eBay instead.

And it’s not just the financial figures that look a bit shonky. Now, questions are being raised over exactly how many users it really has. Back in March 2012, it claimed its 50 millionth blog, with almost 20 billion posts published. A year later it claimed its 100 millionth blog, with almost 45 billion posts published, according to the ticker on its website, as reported by the ever-reliable LA Times.

Even if the doubling of bloggers and blog post is accurate, shouldn’t the number of blog posts increased at a more geometric rate? And with all that traffic, why the failure to generate both revenue and greater traffic?

When its acquisition by Yahoo was announced David Karp, the irritatingly young (and rich) CEO of Tumblr claimed that it had “more than 300 million monthly unique visitors” – averaging out at just six viewers per blog, per month, which doesn’t make it sound like a phenomenal draw to us.

Or maybe these figures just look good compared to Yahoo’s own once-popular suite of online services?