Another overvalued Internet company, and another bid by Yahoo to buy that company - I know, you've heard it all before. But, at the same time, it's hard to escape all the Hulu fuss. Reports and speculations about Yahoo's latest proposed purchase are popping up everywhere. What's all the hype about? Why are companies bidding so much for Hulu? And, more importantly, has Yahoo gone nuts?
In case you're wondering why Hulu is in the news lately, here's the complete scoop.
Streaming, Sure, But Why Hulu?
Any company worth its salt is getting into streaming. But, why Hulu? There are 4 million Hulu subscribers, Hulu is available on 120 million devices, and the streaming service has some popularity. For all intensive purposes, Hulu is second runner up in the streaming game (next to Netflix). I still have to wonder, though, is Hulu worth the $600 to $800 million that Yahoo is willing to pay for it?
Clearly, Yahoo wants to be a major player again. That's why the company decided to hire Melissa Meyer as the current President and CEO of Yahoo. Yahoo also wants to target a younger audience, which is why the company recently purchase Tumblr. But, is Hulu the right move? More importantly, where the heck is Yahoo getting all of this money?
A Major Spending Spree
On the surface, it seems like all Yahoo has been doing lately is buying up other companies. It also seems like Yahoo shouldn't have enough money to keep making these purchases, but all of this is just based on surface judgements. Yahoo made a cool $4.3 million when selling the company's share of Alibaba, and Yahoo rakes in almost $200 million every quarter. Yahoo might be out of the limelight, but this company is far from being broke.
Will Hulu and Tumblr be the answer? Some blogs are reporting that Yahoo is also poised to snatch up some other companies (possibly a communications company too?) It seems premature, though. Most companies work on perfecting current acquisitions before buying up additional acquisitions. Then again, Yahoo (or Meyer) might have a bigger plan that meshes it all together.
What About Innovation?
You also have to wonder about a company that hasn't developed any new projects on its own. It's one thing to snatch up existing companies and all them to a roster, but it's another thing to innovate from the inside. Is Yahoo all out of innovation? Will this buying streak continue? Some are criticizing Mayer's current purchasing method, and other are hoping that she has some kind of master plan.
It's not unusual for companies to purchase other companies - especially those that already have a revenue stream, have got it together, and have a great team, but Yahoo is taking purchases to the extreme. What's next for Yahoo? As mentioned, there are rumours that Mayer has a long list of possible acquisitions. As long as Yahoo keeps pulling in millions per quarter, she certainly has the buying power - but are these good decisions?