According to “sources close to the situation” Yahoo is in “serious” talks with the aim of a making a big investment in or acquiring Tumblr, a social blogging website. AllThingsD reports that a deal to buy out the company would probably cost Yahoo about US$1 billion. It’s not the first time Yahoo CEO Marissa Mayer has shown an interest in Tumblr, while at Google she is said to have “closely watched its fast growth”.
Yahoo needs to do something, possibly through such acquisitions, to make itself cool and relevant again, according to none other than Yahoo Chief Financial Officer Ken Goldman. He said, earlier this week, at the JP Morgan Global Technology conference, that “One of our challenges is we have had an aging demographic.” He thought that Yahoo has strayed from the path of coolness recently; “Part of it is going to be just visibility again in making ourselves cool, which we got away from for a couple of years.”
One of the sources speaking to AllThingsD said that Tumblr would be a perfect fit for the Yahoo portfolio “If you could pick a company that fits in with what Marissa Mayer has demonstrated in her career - aesthetics software technology and fast-growing - you could not land on a better choice”.
Looking at Tumblr in more detail we see a web based company whose sites garnered traffic of 117 million visitors during last month. Over 105 million blogs consisting of over 50 billion posts make up the Tumblr web presence, which importantly has a strong 18-24 demographic. Tumblr traffic volume on the web is comparable to that of LinkedIn or Twitter reports AllThingsD. Tumblr has recently done more to monetise its traffic promoting big brands’ Tumblr presence sites on user dashboards. In terms of revenue the user-generated-blog platform turned over $13 million in the last year. With tweaks and changes to the monetisation schemes it is expected to turn over $100 million this year.
Yahoo’s Mexican standoff victory
In other Yahoo news today, Reuters reports that a huge $2.75 billion ruling against Yahoo in Mexico has been overturned. Last December we reported how a pair of Mexican firms had won a local court case over a breach of contract by Yahoo concerning a commercial services directory the firms were working on together. Yahoo pulled out of the deal in the early 2000s and the two Mexican firms won damages of $2.7 billion for “breach of contract, breach of promise and lost profits from contracts relating to the yellow-pages listings service”.
At the time Yahoo responded quickly and said the “non-final judgement” would be rigorously appealed as the claims against it were “without merit”. Now it seems like Yahoo was right in its assertions, as the Mexican appellate court has thrown out the previous ruling of the lower court.