Yahoo buys Tumblr. promises to not 'screw it up'
NEW YORK (CNNMoney) — Yahoo announced a $1.1 billion deal for blogging site Tumblr early Monday, and said it "promises not to screw it up."
The deal, which had been rumored since last Thursday, will help Yahoo to tap into the younger, active online user base at Tumblr. But the deal raises concerns among some Tumblr fans that the site could end up being cluttered by the ads that brings in billions of dollars a year to Yahoo. Tumblr CEO David Karp has resisted the use of traditional display advertising on Tumblr to this point.
To answer those worries, Yahoo said that Tumblr will be independently operated as a separate business with Karp staying on as CEO.
"Our team isn't changing. Our roadmap isn't changing," said Karp in a statement. "Tumblr gets better faster with more resources to draw from."
Tumblr has 300 million monthly unique visitors and 120,000 sign-ups every day, with about 900 posts a second. As big as that is, it is dwarfed by Yahoo, which posted revenue of about $5 billion last year and a profit of $825 million excluding special items. Yahoo had $5.4 billion in cash on its balance sheet according to ts most recent quarterly earnings statement.
The deal is the biggest move yet by Marissa Mayer, the Yahoo CEO who has has shaken up the company in less than a year on the job. She's rolled out a new homepage, a redesigned Yahoo Mail and refreshed Flickr, its photo-sharing service that some critics said had been dying on the vine before Mayer's changes. She also purchased mobile start-up Stamped for its engineering staff.
Mayer is scheduled to appear at an event in New York later Monday. It is unclear if she will only be talking about the Tumblr deal or if Yahoo has something else to announce as well.
Shares of Yahoo were down in premarket trading Monday. But the stock is up more than 33% this year as investors bet that Mayer will be able to turn around the company, which has faced stiff competition from Google, Facebook and AOL in the past few years. Yahoo still trails Google widely in the online search market, despite a partnership with Microsoft.
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