Why Sovereign Wealth Funds Were Smarter Than Yahoo Shareholders

Screenshot of Yahoo.com from November 11, 2014

Screenshot of Yahoo.com from November 11, 2014


Sunnyvale-based Yahoo was founded by hungry entrepreneurs, Jerry Yang and David Filo. Post dot-com-boom, Yahoo had acquired, sold and shuttered many high-profile acquisitions such as Geocities, Overture Services, Hotjobs.com, Right Media and Broadcast.com (which made Mark Cuban very rich.) In 2013, Yahoo paid US$ 1.1 billion for a blog service called Tumblr, founded by young entrepreneur David Karp. Yahoo had purchased the trendy startup aspiring to challenge Facebook and Twitter. When Yahoo booked goodwill worth US$ 750.9 million from the deal, the company rebutted, “The acquisition of Tumblr is expected to bring a significant community of users to the Yahoo! network.” In comparison, back in 2013, Yahoo had only US$ 74 million in tangible assets.

Why did Yahoo buy a blog service that generates minuscule revenue, yet sell Alibaba?

Selling Alibaba

In 2005, Yahoo paid US$ 1 billion for a 40% stake in Alibaba. Peeling the onion back further, Yahoo hired Scott Thompson as CEO after firing Carol Bartz. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]


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