Yahoo President and CEO Marissa Mayer delivers a keynote during the Yahoo Mobile Developers Conference on February 18, 2016 at The Masonic in San Francisco, California. Stephen Lam/Getty Images

Yahoo says it overvalued Tumblr’s goodwill

Tony Wagner Mar 1, 2016
Yahoo President and CEO Marissa Mayer delivers a keynote during the Yahoo Mobile Developers Conference on February 18, 2016 at The Masonic in San Francisco, California. Stephen Lam/Getty Images

Yahoo already admitted last month it overpaid for Tumblr by a cool $230 million. The beleaguered company now says it may end up writing off most of the billion-dollar acquisition after about two and a half years.

In an annual report filed Monday, Yahoo says “some portion or all of the remaining goodwill of the Tumblr reporting unit” could end up as a loss. That goodwill made up about $750 million of the $1.1 billion Yahoo paid for Tumblr in the first place, Business Insider notes. 

What’s goodwill? It’s basically all the intangibles of a business, like reputation, brand cache, growth potential and so on. From our archives, here’s an explanation from your mate Paddy Hirsch:

Bloomberg noted Tumblr was in transition when Yahoo approached it about a deal. Its audience was large and sought-after, but it hadn’t quite figured out how to monetize yet. The integration hasn’t gone as smoothly as either side likely hoped, and Yahoo’s resources haven’t exactly catapulted Tumblr  to Facebook-, Snapchat- or even Twitter-like success when it comes to ad sales. That melted most of the snow on Yahoo’s slope, so to speak.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.  

Need some Econ 101?

Our new Marketplace Crash Course is here to help. Sign-up for free, learn at your own pace.