Yahoo is on a spending binge. First the company bought Summly for $30 million, then Jybe, then Astrid for undisclosed amounts. Now Yahoo is reportedly negotiating the purchase of New York-based Tumblr.
How much could the deal cost Yahoo? A Facebook-esque $1 billion.
The deal, if it goes through, could be mutually beneficial - Tumblr would receive a reliable source of revenue and an infusion of new customers while Yahoo stands to reinvigorate the company's stature with the 18 to 24-year-old crowd.
And that's been one of Yahoo's biggest problems: acquiring a youthful audience to sell to advertisers.
"One of our challenges is we have had an aging demographic," Ken Goldman, Yahoo's chief financial officer said. "Part of it is going to be just visibility again in making ourselves cool, which we got away from for a couple of years."
Grabbing the younger demographic, especially with an established, and popular platform, could help to infuse Yahoo with new users. It doesn't hurt that Tumblr is one of the few digital platforms, according to AdWeek, best suited for brand advertising, either.
Yahoo's has also tried to acquire a variety of services. Most notably Yahoo recently attempted at purchasing a 75 percent stake in France's Daily motion video service. That deal fell through after a French minister nixed negotiations, the two companies weren't able to reach an equitable agreement.
Citing unnamed sources, AdWeek suggests a deal with Tumblr could happen over the weekend. That is, if other interested parties don't ruin Yahoo's deal first.
Yahoo is worried, GigaOm reports, that Facebook could interject during negotiations and swipe Tumblr before a deal is closed.
Facebook, much like Yahoo, has been on a spending spree. Reportedly in negotiations for Waze, a social mapping application based in Israel, Facebook is also looking to acquire better services which lend themselves to advertisements.The social network giant is also looking to acquire another infusion of the 18 to 24-year-old crowd, much like it did with its previous $1 billion Instragram acquisition.
Regardless, Tumblr may be receptive to any acquisition. Tumblr co-founder and CEO David Karps, 26, according to AllThingsD, needs help running the youthful company, and sort of guidance would be an asset to the young executive.
Update: Well, that was quick. Yahoo has annoucned a "product-related" event on Monday, May 20, at 5 p.m. EST in New York City. Which just happens to be the city where Tumblr is based. Coincidence?
