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David Karp Tumblr

AllThingsD reported this morning that Yahoo’s board approved a $1.1 billion all-cash acquisition of microblogging site Tumblr.

ATD had earlier stated that the board would be meeting on Sunday to consider the acquisition. Yahoo plans to announce the acquisition on Monday, according to “numerous sources” contacted by ATD.

“We don’t comment on rumors or speculation,” a Yahoo spokesperson told VentureBeat this morning.

Yahoo has scheduled a mysterious event for Monday morning in New York, to announce “something special.” If that “something” is the Tumblr acquisition, it would be quite surprising, since the event was announced before the board reportedly confirmed the acquisition. But it would also be a convenient venue to announce a major deal like this.

If it pans out, this would be Yahoo’s largest and perhaps riskiest acquisition since former Google executive Marissa Mayer assumed the chief executive job. By one metric, Tumblr is massive: It hosts 51 billion blog posts, a number that grows by 74 million new posts each day. It draws 216 million visitors globally each month, who collectively generate 16 billion monthly pageviews. That kind of monster traffic puts Tumblr in the ninth position among the most-popular U.S. websites.

However, it generated just $13 million in revenues last year, its first year of revenues, as it slowly began integrating ads into its content stream. The company anticipated making $100 million in revenues this year.

As with Facebook’s acquisition of revenue-less Instagram, the acquisition is less about bringing in a new source of revenue and more about capturing growth and traffic. Yahoo’s traffic, while enormous, has stagnated. It desperately needs a faster-growing property, along with a younger, hipper demographic, and Tumblr would seem to provide both.

That is, if Yahoo doesn’t kill it off or stifle its growth through negligence and mismanagement, as it has done with so many previous acquisitions, including Flickr, Delicious, Geocities, Upcoming, and more.

Top photo: Tumblr founder David Karp is about to be a very rich man. Source: Sean Ludwig/VentureBeat.


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