Yahoo bets farm on Tumblr acquisition

Internet firm Yahoo on Monday moved to acquire blogging platform Tumblr for $1.1bn in cash. In some ways this is a last ditch attempt to keep Yahoo relevant and CEO Marissa Meyer made a promise during the announcement “not to screw it up.”

As a result, Tumblr will be independently operated as a separate business and David Karp will remain CEO, with product, service and brand defined and developed separately from Yahoo.

According to Yahoo’s latest financials, cash, cash equivalents, and investments in marketable debt securities totalled $5.4bn as of March 31, 2013 compared to $6bn as of December 31, 2012. Yet actual cash only totalled $1.2bn, so this latest acquisition wipes out Yahoo’s liquid reserves.

In fact, Yahoo may be clean out of cash since it acquired UK startup Summly in March for around $30m.

Tumblr claims more than 300 million monthly unique visitors and 120,000 signups every day, 900 posts per second and 24 billion minutes spent on site each month. On mobile, more than half of Tumblr’s users are using the mobile app and do an average of seven sessions per day. The acquisition is expected to grow Yahoo’s audience by 50 per cent to more than a billion monthly visitors, and to grow traffic by approximately 20 per cent.

But the big question now is how this move fits in with Yahoo’s other similar-sounding, picture-focused blogging social site, Flickr. Mayer had said that the photo sharing site was a top priority for investment in an attempt to regain lost ground on rivals Facebook, Twitter, Google and Instagram. It remains to be seen how that will play out now the money has been spent.