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Yahoo rumoured to be making a $1 Billion Acquisiton of Tumblr

Tumblr

Earlier today rumours have come to light saying that Yahoo who has been making a lot of cut backs recently is serious about acquiring tumblr the social site that allows you to create your own personal blog.

Various sources are saying that they are planning on acquiring the company out right and they have plans how to utilize the company and make it their own; instead of buying the company running it as a separate entity.

Cost and Demographic

Figures have been thrown around and the acquisition could cost Yahoo up to $1billion, this would value the company at the same level as Instagram which was acquired by Facebook last year.

The yahoo business model has changed from catering to everyone for anything to a select few services and they are concentrating the demographics they are trying to attract.The company is trying to get the attention of tumblr users who are generally aged 18 to 24.

Other Acquisitions

This acquisition would add to the string of them that Marissa Mayer has added to yahoo’s back catalogue since becoming CEO. Under Mayer’s control the company has acquired; Summly, Astrid, Jybe and  many more, the company has also had some failed acquisitions such as Dailymotion.

Along with the speculation of a possible acquisition of Hulu, the tumblr acquisition could just be media speculation since Marissa Mayers is quoted in saying “the company is shopping for smaller targets valued in the $100 million range”.

Projected Earnings

There is no better place to look for a demographic like the 18 to 24 market than tumblr which is intrinsically associated with the demographic, the acquisition would be mutually beneficial.

Yahoo would be able to reel in the demographic and the investors in tumblr would get the big cash out that they’ve been waiting for.

Tumblr has released figures saying that they generated $13 million last year in revenue and are predicting that they could do as much as $100 million this year. This acquisition would be a great thing for Yahoo is tumblr met that target.

Source – TheVerge