Yahoo rumored to be buying Tumblr for $1 billion

With Yahoo trying to make itself relevant once again to the young and hip, the company is rumored to be on the verge of shelling out $1 billion for hosting site Tumblr. This could easily be a win-win deal as Yahoo needs the infusion of young blood while Tumblr is looking for liquidity. There is speculation that Yahoo CEO Marissa Mayer has had her eye on the company for a while and has already met with its executives including Tumblr founder and CEO David Karp.

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.

source: AllThingsD