Yahoo! Inc. (YHOO - Free Report) recently announced the acquisition of social news start-up Snip.it. First reported by AllThingsD, the news was later confirmed in a Snip.it blog post. The terms of the acquisition have not been disclosed, but media reports suggest that it will cost Yahoo more than $10 million.
Founder Ramy Adeeb started the company in 2011 with funds from True and Khosla Ventures as well as other investors. Snip.it is a social platform that allows users to collect, organize and share articles. Users can check other collections, add another collection into their own and share their collection on other social media platforms like Twitter, Facebook (FB - Free Report) , Google Inc.’s (GOOG - Free Report) Google+ and others.
Following the acquisition, Snip.it’s 10-member team will be working with Yahoo. The service from Snip.it will be shut down but users have the option of downloading their data up to Feb 21, 2013.
Yahoo is marching ahead with its plan to acquire struggling start-up companies. Before Snip.it, it acquired another small startup, OnTheAir specializing in broadcasting video chats or interviews to online audiences.
The idea behind acquiring these start-ups is to pick up engineering talent, key technologies and products offered by them. These acquisitions could help Yahoo get into the emerging social marketing segment, where its rivals have already made a play.
In fact, Yahoo’s leadership position in display advertising has been lost to Facebook and Google. With search advertising revenues on a secular decline – not only because of Google but also Microsoft (MSFT - Free Report) , Yahoo needs to focus on the other major growth area. As per an Internet survey, it was found that 65.0% of Internet users in the U.S. used social networking sites, an indication of the growing popularity of the platform.
In the third quarter of fiscal 2012, Yahoo generated revenue of $1.20 billion, which was down 1.3% sequentially and 1.2% year over year. Traffic acquisition cost (TAC) was down 17.7% sequentially and 22.2% from last year. Excluding these costs in all periods, net revenue was essentially flat on a sequential basis and up 1.6% from last year, in line with the consensus estimate.
Yahoo has a Zacks Rank #1 (Strong Buy).