Tumblr has raised $125 million at a valuation of $800 million, so a $1 billion price tag would certainly be in the ballpark, especially since the microblogging site starting adding mobile ads to its mobile app in March. Over the past 6 months, the number of those using Tumblr's mobile app has quadrupled. Tumblr's growth is right now off the charts. The company had $13 million in revenue last year and is expecting as much as $100 million this year.
Yahoo has been shutting down many of its mobile apps and one estimate is that 80% of the company's apps could be gone by the end of the year. But a purchase of Tumblr would add a mobile app that could revitalize Yahoo in the mobile space, where it has yet to make a name for itself.