The deal announced Monday is Mayer’s boldest move since she left Google 10 months ago to lead Yahoo’s latest comeback attempt. It marks Yahoo’s most expensive acquisition since the Sunnyvale, Calif., company bought online search engine Overture a decade ago for $1.3 billion in cash and stock.

Yahoo is paying mostly cash for Tumblr, dipping into what remains of a $7.6 billion windfall reaped last year from selling about half of its stake in Chinese Internet company Alibaba Holdings Group. Taking over Tumblr will devour about one-fifth of the $5.4 billion in cash that Yahoo had in its accounts at the end of March.

While hailing Tumblr as a fount of creativity that attracts 300 million visitors each month, Mayer told analysts Monday that she is “making a sincere promise to not screw it up.” David Karp, a high school dropout who started Tumblr six years ago, will remain in control of the service in an effort to retain the same “irreverence, wit and commitment to empower creators,” Yahoo said.

Karp, 26, may now have a managerial mentor in Mayer, 37. Tumblr, which will remain based in New York, has about 175 employees while Yahoo has 11,300 workers.

Mayer, who worked closely with Google co-founders Larry Page and Sergey Brin during her time at the company, had high praise for Karp during Monday’s conference call. “David Karp is one of the most inspiring, insightful entrepreneurs that I have ever met,” she said.

In his statement, Karp predicted Yahoo would help Tumblr grow even faster as he strives “to make the Internet the ultimate creative canvas. “

The deal is expected to close during the second half of this year.

Tumblr will now play a pivotal role in Mayer’s attempt to reshape Yahoo. To take on the challenge, Mayer ended a highly successful 13-year career at Google, which she helped surpass Yahoo as the Internet’s most influential company. Since coming to Yahoo, Mayer has concentrated on improving employee morale, redesigning services and bringing in more engineering talent through a series of small acquisitions that have collectively cost less than $50 million.

Yahoo will still focus on mostly small deals, Mayer said. She seized the opportunity to buy Tumblr because she believes the service can accelerate her efforts to turn around Yahoo.

“Tumblr is a game changer,” Mayer assured analysts.

As popular as Tumblr has become, the service remains unprofitable. That is likely to raise questions about whether Yahoo paid too much in Mayer’s zeal to gain control over a hot service. Facebook Inc. faced similar doubts last year when it bought Instagram, a rapidly growing photo sharing site, that also hadn’t been trying to make money. Facebook initially agreed to pay $1 billion in stock for Instagram, but the value had fallen to $715 million by the time that deal closed. Facebook still hasn’t proven it will be able to make money off of Instagram.

Mayer’s efforts at Yahoo have been well-received on Wall Street so far, although most of the roughly 70 percent surge in Yahoo’s stock price under Mayer’s leadership has been driven by the rising value of Yahoo’s remaining 24 percent in Alibaba. When Alibaba goes public within the next few years, analysts have estimated Yahoo could collect another $10 billion to $20 billion by selling the rest of its Alibaba stock.

If this deal pays off the way Mayer envisions, Tumblr could help Yahoo finally get its stock price to $33. That would be a major coup because many investors soured on Yahoo after a previous regime led by co-founder Jerry Yang squandered an opportunity five years ago to sell the entire company to Microsoft for $33 per share. The stock spent more than four years trading below $20 before the recent surge. The shares gained 14 cents to $26.66 in Monday’s afternoon trading.

The deal could backfire though if Yahoo’s effort to make more money alienate a Tumblr user base that so far has been subjected to hardly any advertising during the service’s six-year history.

“Yahoo has to manage this acquisition in a way that keeps Tumblr’s user base while trying to add advertising, which historically tends to turn off a lot of people,” said Forrester Research analyst Zachary Reiss-Davis.

Mayer said Yahoo will work with Tumblr to create ads that “are tasteful and seamless.” The company expects Tumblr to start increasing Yahoo’s revenue next year.

Mayer is betting that Tumblr will provide Yahoo with a captivating hook to reel in more traffic and advertisers on smartphones and tablet computers. That rapidly growing market is expected to become even more important during the next decade as people increasingly consume digital content on mobile devices instead of laptop and desktop machines.

More than half of Tumblr’s users connect to the service through the mobile app, and engage in an average of seven sessions per day.

“I would characterize Tumblr as being ahead of Yahoo in terms of its work on mobile,” Mayer said.

Besides offering one of the top mobile apps, Tumblr also runs one of the world’s busiest websites, featuring 75 million daily posts about everything from politics to pets. Advertising has been a missing ingredient so far as Tumblr, like many online services in their early stages, focused on building a loyal audience before turning its attention to making money.

The deal also has some symbolic significance for Yahoo, an 18-year-old company that had spent much of the past decade aimlessly drifting under different management teams while Google Inc. overtook it in terms of size and influence. At the same time, newcomers such as Facebook Inc. and Twitter began to command the attention of people who found themselves spending less and less time on Yahoo.

Part of Yahoo’s problems stemmed from missed chances to improve its service and technology.

Yahoo flirted with potential acquisitions of Google and Facebook in those two companies’ early days, only to have the talks unravel because Yahoo wasn’t prepared to pay asking prices that were far below the current market values of Google ($300 billion) and Facebook ($63 billion). Yahoo also considered buying YouTube in 2006, only to be outbid by Google, which snapped up the world’s leading online service for $1.76 billion — a price that now looks like a bargain.

Even when Yahoo did pull off deals, the company has been criticized for mismanaging a list of acquired services that includes photo-sharing Flickr, online help-wanted service HotJobs and content-sharing service Del.icio.us. Yahoo ended up selling HotJobs and Del.icio.us, but Mayer has been looking at ways to spruce up Flickr and blend its photos into more of Yahoo’s other services. Mayer is expected to discuss more changes for Flickr at an event in New York Monday evening.

Tumblr could help Yahoo recapture some of its cachet with teens and adults in their early 20s, a demographic that has become tougher for Yahoo to reach in recent years as it fell behind the technological curve and struggled to develop compelling services.

While Facebook has turned into a mainstream social network where even grandparents now connect family and friends, Tumblr has become one of the places where the cool kids hang out.

“Tumblr is redefining creative expression online,” Mayer said. “On many levels, Tumblr and Yahoo couldn’t be more different, but, at the same time, they couldn’t be more complementary.”

Tumblr emerged as a trendy online hangout by providing a service that makes it easy to share blog posts, photos, video and other content in an enthralling mosaic. The service says it has amassed more than 50 billion posts from 108 million blogs. Tumblr users rely on a dashboard to pinpoint the kinds of blogs that they want to track and also have tools to pass along the posts that interest them.

That wealth of content could be interwoven into Yahoo’s other services that provide coverage of general news, sports, finance and entertainment. Tumblr also will fill Yahoo’s gaping void in the realm of social media. Yahoo so far has had to connect its services to Facebook and Twitter to give its users a social networking outlet.

Having its own social networking service will also give Yahoo more insights into the things that people like — a key to distributing ads to consumers most likely to be interested in a specific products. That data, in turn, should help Yahoo sell more ads and accelerate its revenue growth. After three successive years of declines, Yahoo’s revenue rose slightly last year, but lagged far behind the growth at Google and Facebook. Mayer has vowed to bring Yahoo’s revenue growth back to at least the level of the overall Internet ad market.

Yahoo’s acquisition will deliver a jackpot to Karp, who dropped out of high school to concentrate on computer programming. He ended up being home schooled while taking classes in Japanese and working on gambling software. Later, he became a product executive at a parenting website called UrbanBaby. After CNet bought the site in 2006, Karp set up his own a development service called “Davidville” before deciding to create an outlet for personal expression — an endeavor that hatched Tumblr.

Karp’s cut from the Yahoo deal is about $275 million. Most of the rest of the money will be paid to the venture capitalists that invested about $125 million into Tumblr. That list includes Spark Capital, Sequoia Capital, Greylock Partners, Union Square Ventures and Insight Venture Partners.

Copyright 2013 The Associated Press.

Thirty-six years ago, Vicki and Rich Walker would have never imagined their three-acre home would be transformed into sprawling Wisteria Gardens.

“All of this has grown. I can’t even believe it,” said Rich Walker.

“They say, ‘I’ve driven by here a hundred times and I am just shocked that this is back here,’” said Vicki.

It’s now a backdrop for one of the most special days in a couple’s life.

“When you see a bride and groom coming holding hands going on the tour, that’s what I love,” said Vicki.

The Walkers are in their second full wedding season.

“My husband had project after project after project,” said Vicki.

Their first business, Villa Iron, took a hit during tough economic times.

“I had men that I had to let go that I had with me for 30 years,” said Rich. “They were like family.”

From 17 employees down to four, and that’s when the Walkers decided to open their home as a wedding venue.

“With the economy the way it is, people don’t spend the money on hand-forged goods,” said Rich.

But the grounds here sell themselves. Rich would come home after a long day and spend hours working with no idea of what the future would bring.

“If I was stressed or whatever, I would pick a project in one area,” said Rich. “I never had a major plan. It just developed from there and I never stopped.”

And they’re not stopping now.

“I love to see the weddings and young people. They’re so nice,” said Rich.

“If I can help them on that special day it’s all worth it,” said Vicki. “It’s all worth it.”

They say the past couple of years have been more successful than they expected, and they hope to see many more couples tie the knot.

“So far so good, and we hope to have it even better,” said Rich.

The Walkers Villa Iron Works is still in business. Many of the company’s pieces are display at Wisteria Gardens.

SACRAMENTO (CBS13) – A couple of friends took an obsessive couponing hobby and turned it into a cash cow. They just launched a new website that not only benefits small businesses but keeps money in your pocket.

Steven Kott’s not afraid to admit it, “I’m the couponer in the family.”

This savvy saver clips to cut down on expenses.

“I’m the one out there looking for the deals. My wife asks me,’ you got any coupons?’ I say, ‘yeah, I got some,’” said Kott.

So he and a friend came up with a crazy idea. You may have seen Krazy4Coupons.net driving around town.

“We created it for the small businesses to make them more successful than they already are today as well as for the consumer,” said Kott.

Unlike popular discount sites like Groupon and Living Social, Krazy 4 Coupons doesn’t require you to pay for the coupon ahead of time. You just click and print for free.

“We offer more for the business, and on top, we don’t have 50 percent off of the coupon,” said Kott.

The website’s been up and running for only a few weeks, but small business owners say it’s working.

“We get a lot of response from that coupon. You can’t beat that,” said Kott.

Matthew Fare, owner of NY Pizza in Roseville, has been in business for 17 years and says advertising is the key to his success because he’s tucked away in a shopping center with little foot traffic.

“They try, they like it, they come back,” said Fare.

Although some men may find it embarrassing, Kott thinks clipping coupons is cool.

“Any guy that wants to coupon, come with me we’ll do it together,” said Kott.

For a few hundred dollars per year, small businesses can be featured on the site.

SACRAMENTO (CBS13) – The large grocery box stores may be making a comeback in Sacramento as changing an old rule may entice these chains to build in the capital city once again.

“I think that’s a great idea,” said one shopper.

The city of Sacramento is taking a good look at changing the box store ordinance for what they say will level the playing field against other cities in the area allowing Targets and Walmarts to move in without the extra demands.

“For me, I want to see more of these types of stores within the city limits,” said Joe Hitomi, who shops at big-box stores.

Cities like Rocklin and Elk Grove have nearly the same amount of these super grocery stores as Sacramento has even though Sacramento’s population is more than double that of suburb communities.

“I live in Greenhaven and there’s no Walmart or Target and I have to drive all the way over here to Broadway just to go to Target,” said Sacramento resident Lonnetta Williams.

“We’ll go out to Natomas or Roseville but it’d be nice if there were more,” said Sacramento resident Andre Martinez.

The ordinance requiring an extra economic impact analysis for giant box stores that also sells groceries was put in place to protect local markets. And some shoppers want it to stay that way.

“I’d like to see fewer box stores. Box stores like Walmart aren’t unionized and they tend to pay their employees really low wages,” said Sacramento resident Joan Markoff.

The city is finding people are just driving outside the city to go to these stores, causing Sacramento to lose valuable revenues that could help pay for police officers, firefighters and road repairs.

“You’re talking tax dollars right there. You’re talking money and money talks,” said Sacramento resident Michael Lunardi.

The planning and design commission will discuss the idea on Thursday. The California retailers association supports repealing the ordinance.

Core Logic, a real estate data provider, said Tuesday that annual home prices have now increased for 13 straight months. Prices are rising in part because more buyers are bidding on a limited supply of homes for sale.

Prices increased in 46 states over the past year — 11 of them posting double-digit gains. And when excluding distressed sales, which include foreclosures and short sales, prices rose in every state. A short sale is when a home sells for less than what is owed on the mortgage.

Nevada led all states with a 22.2 percent annual gain. It was followed by California (17.2 percent), Arizona (16.8 percent), Idaho (14.5 percent) and Oregon (14.3 percent).

Home prices also rose 1.9 percent in March from February, signaling a solid start to the spring buying season. And 88 of the 100 largest cities reported price gains compared with a year earlier, down slightly from 92 in February.

Prices in Phoenix rose 18.8 percent in March from a year earlier, the largest gain of any city. Los Angeles, Riverside, Calif., Atlanta and Houston posted the next largest gains.

Steady job creation and record-low mortgage rates have boosted home sales and construction in the past year. More demand, along with a limited supply of homes for sale, has pushed prices higher.

The number of homes for sale fell nearly 17 percent in March compared with a year ago. That supply would be exhausted in about 4.7 months at the current sales pace. That’s below the 6 months of supply that is typical in a healthy market.

Rising home prices can help sustain the housing rebound and lift the economy. More potential homebuyers may seek to purchase a house before prices rise further. And homeowners are more likely to put their houses on the market once they expect a good price.

Higher home values also boost Americans’ overall net worth. That can encourage consumers to spend more, driving more economic growth. Consumer spending accounts for roughly 70 percent of economic activity.

Copyright 2013 The Associated Press.

SACRAMENTO (CBS13) – A Sacramento man was arrested Wednesday for allegedly invoicing Caltrans for print ads his company was supposed to create and run in local newspapers, but never did, Caltrans says.

Eric Blaine Hodgson, 43, owner of Phenix Print & Image in Elk Grove, was hired by Caltrans to create print ads that would advertise new construction contracts to bidders. His company created the invoices, but the ads never ran, a routine Caltrans audit revealed. A subsequent review of Phenix uncovered more evidence of the fraudulent activity, which was handed over to the California Department of Justice, Caltrans says.

“No, no, no, he never did. I know him,” said Kathy Silvers, who rents out an Elk Grove house that belongs to Hodgson.

Two invoices showed contracts for work awarded to Phenix in 2008 and 2009 totaled more than $1.8 million. Caltrans says it awarded a contract to Phenix in 2011 for more than $800,000, but terminated the contract before money changed hands.

“I’m not sure exactly when the fraud began,” Caltrans spokesperson Tamie McGowen said. “The proof of publication that he was providing to us didn’t match up with what was actually running in the newspapers.”

In total, Hodgson defrauded the state of $1.9 million, the department says, which was spent on paying off his mortgage, purchasing toys and comics, and paying for exotic trips for him and his staff. He posted several trip photos on his Facebook page.

“My office’s investigation found that this individual defrauded California taxpayers by failing to do the work he was paid for under his contract with the state,” said Attorney General Kamala D. Harris. “We will aggressively prosecute this case and seek to recover every dollar of the public’s money that was misused.”

Silvers says her son works for Hodgson and that he was going to give her son $4,000 for his birthday and take him on a cruise to the Caribbean.

Hodgson was arrested on 22 counts of grand theft and booked into the Sacramento County Jail.