Yahoo, Tumblr tie-up in the works?

Where there's smoke, there's fire -- maybe. Yahoo CEO Marissa Mayer reportedly seeks to attract a younger, hipper demographic and Tumblr is said to be the apple of her eye.

Yahoo CEO Marissa Mayer is reportedly eyeing Tumblr. Stephen Shankland/CNET

While her former employer dominated most of the tech headlines this week at Google I/O, Yahoo CEO Marissa Mayer is working on news of her own. Perhaps.

Late Thursday, a flurry of rumors surfaced about a possible tie-up between Yahoo and Tumblr. AllThingsD started the ball rolling and AdWeek independently confirmed with "multiple sources" that the talks are indeed beaucoup serious with a possible price tag as high as $1 billion.

The rationale: Mayer is keen to attract a younger, hipper demographic for Yahoo. The timing might be right. According to AdWeek, Tumblr "has been looking to make a big exit to justify its huge valuation."

Yahoo's chief financial officer, speaking at a financial conference in Boston earlier in the week, alluded to just that problem. "One of our challenges is we have had an aging demographic," CFO Ken Goldman 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."

Given that concern, a deal for Tumblr -- or some other strategic partnership -- makes sense on paper. Then again, Yahoo has a long and uneven history of doing deals which looked sensible on paper but ultimately flopped, the multibillion dollar deal for Mark Cuban's Broadcast.com being the most egregious waste. Of course, that was back in 1999 when irrational enthusiasm enveloped the tech industry during the dawn of the internet commerce. This is a different time and a different CEO.

 

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