Yahoo-Tumblr deal is a goer

Posted by a staff writer

Yahoo's beleaguered board has written a rumoured $1.1 billion cheque to buy the social blogging site Tumblr.

The Tumblr deal was rumoured last week and it looks like it is accurate if the Wall Street Journal's secret special sauces are correct.

The deal could be announced today. Yahoo already has an event scheduled for today in New York on the basis that if you make an announcement there you can make it anywhere.

Yahoo CEO Marissa Mayer become interested in the site only a couple of months ago, but sees the Tumblr purchase as a way to big inroads into social media and boosting revenue growth.

The news is supposed to be an antidote to other rumours that there are dark things going on at the top of Yahoo's executive ladder. Key people have been departing from Yahoo's mobile team and there are other portents of doom.

Tumblr, too, is seen as being in trouble. Yahoo's $1.1 billion offer would normally have been sniffed at as being far too low. But other rumours suggest that Tumblr may be looking at a fast-depleting cash pile, which again gives it good reason to sell.

Of course there are some users who are threatening to depart from Tumblr if the Yahoo deal goes through and visitor growth to the site appears to be flat or declining slightly in 2013, so the deal might not be great for Yahoo.

There are always those who threaten to leave a site if its ownership changes hands. Instagram also had shedloads of users claiming they were going to shut down their accounts and depart for good when Facebook took it.

What is a little strange is how Yahoo is affording the buy. It only had $1.2 billion cash on hand as of its most recent quarterly earnings so this could be the last of its big spends.