Yahoo Buys Tumblr for $1.1bn

Yahoo is rumoured to be in talks to buy yet another start-up, this time in the form of microblogging platform Tumblr.

While Yahoo has called a press conference for 5pm ET today, the Wall Street Journal has already reported that it will pay $1.1bn for the start-up, which was founded in New York in 2007. Tumblr says it has more than 330m monthly unqiue visitors and hosts 108m blogs worldwide, but like many free sites, is yet to monetise effectively.

Since Yahoo appointed its new CEO Marissa Mayer in July last year, the company has already acquired 10 more small businesses, including Loki Studios, a mobile gaming company, its fourth acquisition this month. Among the other buyouts are Stamped and Jybe, which both work around mobile recommendations for restaurants and entertainment services, Alike, an app which enables its users to see if they look like a celebrity, the Astrid to-do list app and Summly’s mobile news aggregator.

Many of these are talent acquisitions, in line with the strategy outlined in Mayers first earnings call, where she said the company needed to build a strong technology talent-base for mobile. But Andrew Yates, CEO and co-founder of Artesian Solutions, a cloud-based social CRM provider, believes Tumblr is a keeper.

“Tumblr provides Yahoo with a captive audience that it can engage with using its existing advertising model to break into both the social and mobile domain,” he said. “As the commercial value of social channels continues to rise, we will see more large vendors look to defend their dominance in the competitor landscape by acquiring young social start-ups.”

Update

Yahoo has now confirmed the buyout of Tumblr for the rumoured $1.1bn asking price – with most of that sum being paid in cash. The press statement outlined rather ambitious plans for the partnership, with it expected to grow Yahoos audience by 50 per cent to more than 1bn monthly visitors and to grow traffic by around 20 per cent.

The statement, in a rather shrewd hat tilt to Tumblrs current audience, made a promise not to screw [the service] up. Tumblr will be independently operated and developed as a separate business. Its current CEO David Karp will remain in place and it will not lose any of its irreverence, wit and commitment to empower creators, the statement said.

David Karp, CEO of Tumblr, addressed the Tumblr community: “Our team isnt changing. Our roadmap isnt changing. And our mission — to empower creators to make their best work and get it in front of the audience they deserve — certainly isnt changing. But were elated to have the support of Yahoo and their team who share our dream to make the internet the ultimate creative canvas. Tumblr gets better faster with more resources to draw from.”

More stats:

  • More than half of Tumblrs users are mobile app users and each has an average of 7 sessions per day
  • 120,000 signups every day
  • 50bn blog posts and 75m more arriving each day
  • 900 posts per second
  • 24bn minutes spent on site each month

The transaction is expected to close in the second half of the year.

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