The
deal, first reported by The Wall Street Journal, if confirmed would be
the largest for Yahoo! since Marissa Mayer took over as chief executive
last year. Neither Yahoo! nor Tumblr commented on the report.
"We
don't comment on rumors or speculation," a Yahoo! spokesman said in an
email. Mayer, however, has scheduled a news conference in New York on
Monday at which the company said it will unveil "something special."
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 in the Yahoo! family could offer the potential for new
advertising and other revenue sources.
John
Battelle, an entrepreneur who founded Wired and Federated Media
Publishing, said "there are plenty of smart and appropriate takes on why
this move makes sense," because the the Web is moving from a static
environment to one of "streams" of data.
"We're
all shifting our attention to mobile devices, and we've adopted the
'stream' as our preferred method of content discovery and consumption.
That stream doesn't work so well with standard display," he said in a
blog post.
"And Tumblr was built from the ground up as an activity stream."
Roger Kay at Endpoint Technologies said the deal "brings a social element that Yahoo! is missing and a set of new users."
But
Kay added that "paying $1.1 billion for a company with $13 million in
revenue seems a little nuts to me... Those numbers aren't even earnings,
which are surely negative. So, even if Tumblr survives intact, Yahoo is
unlikely to get its $1.1 billion back over any interval that falls
within a human lifetime."
Trip Chowdhry at Global Equities Research said the deal could make sense if Yahoo! creates incentives for the Tumblr team.
"They have a very difficult time recruiting smart engineers," Chowdhry said.
"They
need the team committed to stay at least four years. So the deal should
be cash and stock. Cash is bad because it creates no incentives for
Tumblr employees. An asset means nothing if the talent leaves."
Founded
in 2007 and headquartered in New York, Tumblr says it has more than 108
million blogs, 50 billion postings in 12 languages and 175 employees.
The website ranking site Alexa lists Tumblr as number 32 in terms of
global popularity.
The Journal said Yahoo's
board unanimously approved the deal in a meeting by telephone on Friday
and that it could be announced Monday.
According
to the technology website AllThingsD, which is part of the Journal's
parent company, Tumblr founder and chief executive David Karp will get a
large cash windfall and also stay at Yahoo! for four years, retaining
control over the service.
The website said
Yahoo! would take a largely "hands-off" approach to Tumblr without
integrating into the Internet giant's other services. But Yahoo! will
help support Tumblr's efforts in advertising and expand distribution, it
said.
Yahoo! recently failed in a bid to take
over the online video site Dailymotion after the French government,
which owns a stake, quashed the deal. The California firm is now
reported to be interested in another video website, Hulu.
Mayer is seeking to help Yahoo! regain its former glory, by emphasizing social media and mobile Internet.
Tumblr has grow into one of the most popular social media sites, but has also been dogged by copyright issues.
It got a round of funding in 2011 worth $85 million that reportedly valued the operation at $800 million.
Karp
is a New York native who dropped out of Bronx High School of Science at
age 15, according to the technology website TechCrunch's Crunchbase. He
is now 26.
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