Yahoo! pays US$1.1bn for Tumblr

The two firms confirmed weekend reports of the tie-up, in a deal which helps the struggling Internet pioneer connect with Tumblr's youthful users.

The companies said a substantial amount of the purchase price will be paid in cash.

Yahoo! chief executive Marissa Mayer said the fast-growing Tumblr would operate independently but that the groups would work together to create advertising opportunities that are seamless and enhance the user's experience.

"We promise not to screw it up," Mayer said in a blog post on Tumblr, as Yahoo! moved its official company blog to the new platform.

"Tumblr is incredibly special and has a great thing going. We will operate Tumblr independently. David Karp will remain its chief executive," Mayer said.

"The product roadmap, their team, their wit and irreverence will all remain as they are, as will their mission to empower creators to make their best work and get it in front of the audience they deserve. Yahoo! will help Tumblr get even better, faster," Mayer added.

Karp, in a statement to "the Tumblr community," said, "Our team isn't changing. Our roadmap isn't changing. And our mission certainly isn't changing. But we're elated to have the support of Yahoo! and their team who share our dreams.

The deal is expected to be finalised in the second half of the year.

Yahoo! hungry for deals

Yahoo! has been looking at a range of possible acquisitions since Mayer took the helm last year and vowed to revive the company, which has faded in the face of competition from Google.

Tumblr could be key to Yahoo!'s strategy because of its popularity with younger Internet users. A survey this year conducted by the online data group Survata found Tumblr more popular than Facebook among those aged 13 to 25.

While Tumblr generates very little cash, bringing it into the Yahoo! family could offer the potential for new advertising and other revenue sources.

Roger Kay at Endpoint Technologies said the deal "brings a social element that Yahoo! is missing and a set of new users."

"Paying US$1.1bn for a company with US$13m in revenue seems nuts to me," said Kay. "Those numbers aren't even earnings, which are surely negative. So, even if Tumblr survives intact, Yahoo is unlikely to get its money back over any interval that falls within a human lifetime," he added.

Founded in 2007 and based in New York, Tumblr says it has more than 108m blogs, 50bn postings in 12 languages and 175 employees. The website ranking site Alexa lists Tumblr as number 32 in terms of global popularity.

Source: AFP via I-Net Bridge