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Cramer: Yahoo's Tumblr Acquisition 'Works'

Yahoo's groundbreaking acquisition of blogging website Tumblr makes sense, CNBC's Jim Cramer said Monday on"Squawk on the Street," and many in the market may not be young enough to realize it.

"People who are devoid of a blog, they go on Tumblr," Cramer said. "Social media is underrated by people who are older than 23."

Despite a lack of significant earnings from Tumblr, over time several acquisitions of this nature have paid off, such as Google buying YouTube or Facebook's purchase of Instagram.


"I will point out that they have 180 million users, so suddenly Tumblr gives Yahoo relevance," Cramer said. "$1.1 billion, that's just a check and suddenly 180 million people have heard of Yahoo."

However, he added, "cool can't be purchased."

Yahoo said Monday it will buy the blogging website for $1.1 billion in cash, in a bold move to make itself more relevant amid the explosion of social media on the Internet.

"It has a lot of silly stuff, but it's not silly if you're a teenager. And you want that teenage demographic if you want to sell them Old Spice," Cramer said.

"If you can get a TV channel for 180 million people, on the Web, I gotta tell you, it works."

In the press release announcing the deal, Yahoo said it "promises not to screw it up." It said Tumblr will operate independently as a separate business, perhaps trying to assuage Tumblr users who are concerned that Yahoo would irrevocably alter the blogging site's edgy image.

However, according to Engadget, approximately 72,000 blogs defected from Tumblr after the Yahoo acquisition was announced. This signals that users may not fully buy in to Yahoo's promise not to "screw it up," which is yet to be seen.

Disclosure: CNBC has a content-sharing partnership with Yahoo's finance site.

Jim Cramer's charitable trust owns shares of Facebook.

_ NBC News contributed to this report.

_ By CNBC's Paul Toscano. Follow him on Twitter and get the latest stories from "Squawk on the Street" @ToscanoPaul

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