/// Will Yahoo Try to Get Its "Cool Again" by Doing a Deal for Tumblr?

May 16, 2013  |  All Things Digital

Earlier this week, Yahoo CFO Ken Goldman spoke at JP Morgan’s Global Technology conference and underscored the need for the aging Silicon Valley Internet giant to attract more users from the coveted 18-to-24-years-old age bracket. Along with more marketing, he explicitly said Yahoo needed to be “cool again.” “One of our challenges is we have had an aging demographic,” said Goldman at the Boston event. “Part of it is going to be just visibility again in making ourselves cool, which we got away from for a couple of years.” According to sources close to the situation, that could mean a strategic alliance and investment in or outright buy of perhaps the coolest Internet company of late: Tumblr. Sources said the talks were serious, but any kind of deal — of course — could come to naught. But it’s not the first time Yahoo CEO Marissa Mayer has been interested in the New York-based hipster blogging service. As an executive at Google, she had closely watched its fast growth, along with that of Foursquare. Since she took over at Yahoo, several sources said that she has met with its top execs, including founder and CEO David Karp. But sources said that interest has gotten stronger more recently, coming at the same time as Tumblr has been stepping up its efforts to raise a large funding round that could value the New York company at $1 billion. In a series of fundings since 2007, Tumblr has raised $125 million so far, at a reported valuation of $800 million. In the latest round, one source close to the situation said Tumblr was considering “strategic” investments, which would presumably be of the kind that Yahoo had tried and failed to do recently with France’s Dailymotion video service. Since then, Mayer and her team have looked at the ongoing deal to purchase Hulu that has many possible other bidders. Tumblr is different from Dailymotion or Hulu, of course, in that it focuses heavily on user-generated content, largely text and photos, although there is an increasing use of video on the site. But this puts it directly in Yahoo’s main wheelhouse, especially recent efforts to undergird its strong set of existing media offerings to appeal to a different audience and also get into the social space via consumer-based software solutions that are both elegant and easy to use. “If you could pick a company that fits in with what Marissa Mayer has demonstrated in her career — aesthetics software technology and fast-growing — you could not land on a better choice,” said another source. That said, Yahoo has been sticking to smaller acquisitions under Mayer’s regime, spending very little on a clutch of small mobile startups to up its game in the important sector. And at the same investment conference, Goldman also said additional M&A would continue to be smaller for Yahoo. Still, any kind of deal with Tumblr could certainly bring Yahoo a big, young audience. Its worldwide traffic was at 117 million visitors in April, according to comScore. On its home page, Tumblr claims it has 107.8 million blogs and 50.6 billion posts.

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Will Yahoo Try to Get Its "Cool Again" by Doing a Deal for Tumblr?

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