Yahoo pulls trigger on $1 billion-plus Tumblr buy

Summary:The Wall Street Journal reported that Yahoo is indeed buying Tumblr for $1.1 billion. This is easily Yahoo CEO Marissa Mayer's biggest move to date.

The rumors appear to have been correct. The Wall Street Journal (WSJ) is reporting that on Sunday Yahoo's board will approve buying Tumblr, the blogging and social networking platform, for $1.1 billion.

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Yahoo CEO Marissa Mayer makes the biggest move to date in her tenure as Yahoo acquires Tumblr for over a billion dollars.

According to the WSJ, the deal could be announced as early as Monday. Tumblr will be allowed to run as an independent business unit.

Why would Yahoo, under the leadership of newly minted CEO Marissa Mayer make such a move? The WSJ speculates that it was to gain a social networking presence. Google+ is now the second most popular social network in the world . Yahoo has had no social networking sites to speak of.

Yahoo's one previous major social networking play--the purchase of GeoCities in 1999 for approximately $3.5-billion-- ended in failure in 2009

This acquisition had been rumored for several weeks. Reports suggested Mayer would announce the deal on Monday at an event in New York City, and that both companies' boards are in the final stages of approving the deal. It has also been said that Mayer will be announcing major changes with Yahoo's photo-sharing site Flickr.  

This buyout would easily be Mayer's biggest move to date. She has been unsuccessful in freeing Yahoo of its search deal with Microsoft and in acquiring online video website Dailymotion .

While Tumblr itself generated only a minute $13 million in revenue in 2012, Tumblr has hundreds of millions of users. Better still, from Yahoo's position, its users are younger than Yahoo's existing aging, and shrinking, customer base. The move is a gamble but to make Yahoo relevant again, Mayer has decided to roll the dice on a splashy acquisition move.

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Topics: Tech Industry, Networking, Social Enterprise

About

Steven J. Vaughan-Nichols, aka sjvn, has been writing about technology and the business of technology since CP/M-80 was the cutting edge, PC operating system; 300bps was a fast Internet connection; WordStar was the state of the art word processor; and we liked it.His work has been published in everything from highly technical publications... Full Bio

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