Douglas MacMillan San Francisco
YAHOO is buying blogging network Tumblr for about $1.1 billion (R10.4bn) as chief executive Marissa Mayer seeks to lure users and advertisers with her priciest acquisition to date.
Tumblr would continue to host its more than 108 million blogs, while chief executive and founder David Karp would remain in charge of the website, Yahoo said yesterday.
Mayer, the chief executive of the biggest US web portal since last July, is betting that Tumblr will help transform Yahoo into a hip destination in the era of social networking as she challenges Google and Facebook in the $17.7bn display advertising market.
The price she was paying, about a fifth of Yahoo’s $5.4bn in cash, underscored the deal’s importance to her turnaround effort, Forrester Research analyst Zachary Reiss-Davis said.
“It’s an aggressive move,” Reiss-Davis said. “They are saying, ‘where is our next group of people who are going to spend many hours per week on Yahoo properties?’ It’s a big bet that the answer is going to be Tumblr users.”
Founded by Karp in 2007, Tumblr grew to log more than 13 billion global page views in the past month.
The site offers a free service for publishing blogs on the web and mobile devices, and tools for sharing photos and other content across social networks.
While Tumblr recently began letting advertisers pay for prominent placement and said it expected to become profitable this year, Karp has resisted covering web pages with promotions to avoid alienating Tumblr’s younger audience.
The deal will make a multimillionaire out of Karp, who founded the company using money and experience he had acquired as a software consultant for the website UrbanBaby. Prior to that role, Karp interned at online video creator Frederator Studios and worked as a salesman at a Tekserve store.
Karp dropped out of high school before moving by himself to Tokyo when he was 17. He founded Tumblr after returning to New York and still has not earned his high-school diploma. – Bloomberg