By Moving to Acquire Tumblr, The Reasons to Own Yahoo! Inc. (YHOO) Have Completely Changed

To replicate this kind functionality, then, Yahoo will have to bolster its online offerings. It already possess many useful properties that could be deployed (Yahoo Finance, Yahoo Mail, etc.) in this endeavor, but it’s still lacking.

To rectify this, Yahoo! has gone on an acquisition spree. Tumblr would be the biggest and most significant in at least a decade, but Yahoo! has acquired eight other companies just this year.

Yahoo’s other takeover targets

Although Tumblr in particular may have been surprising, the fact that Yahoo made a relatively big purchase should not be. In recent months, rumors have linked Yahoo! to such varied companies as DailyMotion, OpenTable Inc (NASDAQ:OPEN) and Zynga Inc (NASDAQ:ZNGA).

Yelp Inc (NYSE:YELP) has also been seen as a Yahoo! target, and if the company wants to compete with Google in pre-emptive search, it would make sense.

Google acquired Yelp Inc (NYSE:YELP) competitor Zagat in 2011. Google’s recent upgrade to its maps app brought Zagat into greater focus, as its reviews are displayed prominently right on Google’s maps.

Although Mayer has said she doesn’t intend to get into maps, Yelp would give the company greater presence in the local space, while sweetening the prospect of a closer integration between Yahoo! and Apple Inc. (NASDAQ:AAPL).

Whether Yahoo! ultimately makes the move to acquire Yelp in particular, or other alternative tech companies, it doesn’t seem likely that Tumblr will be the end of Yahoo’s acquisition streak. Tumblr could provide some powerful social networking synergies, but Yahoo!+Tumblr still falls short of the capabilities of a company like Google.

A different Yahoo!

Yahoo’s been an incredible investment over the last 21 months. But most of that rally has been predicated on hopes that the company planned to return significant capital to shareholders.

Now, that doesn’t seem as clear. Although the company’s stakes in Alibaba and Yahoo! Japan could prove to be immensely valuable, the capital generated by selling those assets might wind up being channeled into acquisitions — not capital returns.

That might prove to be even more true if Loeb shifts his focus from Yahoo! to Sony.

In that case, investors will have to decide if they buy Mayer’s vision for Yahoo’s core business.

The article By Moving to Acquire Tumblr, The Reasons to Own Yahoo Have Completely Changed originally appeared on Fool.com and is written by Salvatore “Sam” Mattera.

Salvatore “Sam” is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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