With the $1.1 billion acquisition of Tumblr, Yahoo is putting a serious claim in for the future of social and mobile technology. Whether it turns out to be a boon or a bust for Yahoo shareholders, the deal will be one of the biggest tests for chief executive Marissa Mayer's leadership.
Let's start with the obvious point. The purchase price is a lot of money. Yahoo is not getting Tumblr on the cheap. At $1.1 billion, the company will be spending about one-fifth of the cash and short term investments it had at the end of its last quarterly statement. This is a big bet for Yahoo.