Yahoo! buys Tumblr for $1.1 billion in cash

Written by Edward Chester

May 20, 2013 | 16:27

Tags: #acquire #buy #buyout #cash #tumblr

Companies: #yahoo

Yahoo! has officially announced it is to buy the popular blogging site Tumblr, for 1.1$billion (£723million) in cash.

The company made the announcement via its new official blog now hosted on Tumblr.

Revealingly, Marissa Mayer, the company's CEO, followed her opening remark of "I’m delighted to announce that we’ve reached an agreement to acquire Tumblr" with "we promise not to screw it up."

Mayer revealed that founder and CEO, David Karp, will be staying on as CEO for the time being as Yahoo! will run Tumblr independently from Yahoo! She further aimed to reassure users, adding "The product roadmap, their team, their wit and irreverence will all remain the same 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."

Karp posted on his own blog, adding "We're 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."

The deal is being seen as a positive one for both parties with Yahoo! acquiring a huge user base and Tumblr's shareholders receiving a high price for their shares. At last evaluation the company was only valued at $800million, making today's purchase a significant increase.

Tumblr is a short-form blogging site that was founded only six years ago by David Karp and Marco Arment (who left the company in 2010 to start instapaper). It has already reached over 100 million blogs with over 300 million unique visitors visiting the site everyday. These figures will, Yahoo! estimates, grow the company's audience by 50 percent and its overall traffic by 20 percent.

Tumblr has, however, struggled so far to make money, with it bringing in only $13million in 2012, according to a report by Forbes magazine.

Meanwhile, Yahoo remains a giant in the internet world, with around 700 million unique visitors a month, despite a dwindling presence in search engine usage. The majority of its revenues come from advertising, which ties in well with potential monetising strategies for a blogging platform.

However, the company shed more than 1,000 jobs during 2012 and has long been internally divided over whether to focus on media production or on technologies and services.

Will Yahoo! be able to make a success of Tumblr? Let us know your thoughts in the comments?
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