updated 02:06 pm EDT, Sun May 19, 2013
Stagnant Internet giant buys popular young property
In the latest step of CEO Marissa Mayer's plan to turn around popular but stagnating Internet giant Yahoo, the company's board has reportedly approved a $1.1 billion acquisition of the social sharing site Tumblr. The board met on Sunday to discuss the acquisition, which appears to have been a foregone conclusion due to the fact that Yahoo had already scheduled a Monday event on Friday. The company is expected to announce the acquisition at that event.
AllThingsD confirmed the billion-dollar buy on Sunday, noting that Tumblr will retain its current CEO, David Karp, for at least four years. Similarly to how Instagram operates even after being acquired by Facebook, Karp will retain a degree of control over Tumblr, but Yahoo will boost Tumblr's advertising business with its own infrastructure.
While Yahoo's portal draws hundreds of millions of visitors, the company is largely thought to have stagnated in the years since its heyday. Tumblr, by comparison, is considered hip, with U.S. desktop traffic around 37 million for April, roughly equivalent to that of LinkedIn or Twitter. The question remains how Yahoo will monetize Tumblr; the site's users seem resistant to standard advertising, and the questionable content available on some Tumblrs may prove unattractive to advertisers.
Still, the acquisition ranks as the largest Yahoo CEO Marissa Mayer has made in the time since she took over the company last year. Tumblr, it's said, will be "the stake in the ground of what her strategy is going forward for Yahoo."