SAN FRANCISCO - Yahoo's CEO is making a $1.1 billion bet on the online blogging forum Tumblr as Marissa Mayer tries to make a former Internet icon cool again.
The deal announced Monday is Mayer's boldest move since she left Google 10 months ago to lead Yahoo's latest comeback attempt. It marks Yahoo's most expensive acquisition since it bought online search engine Overture a decade ago for $1.3 billion in cash and stock.
Mayer told analysts that she is "making a sincere promise to not screw it up."
Yahoo is paying mostly cash for Tumblr, dipping into what remains of a $7.6 billion windfall reaped last year from selling about half of its stake in Chinese Internet company Alibaba Holdings Group. Taking over Tumblr will devour about one-fifth of the $5.4 billion in cash that Yahoo had in its accounts at the end of March.
Mayer praised Tumblr as a fount of creativity that attracts 300 million visitors each month. David Karp, a 26-year-old high school dropout who started Tumblr six years ago, will remain in control of the service in an effort to retain the same "irreverence, wit and commitment to empower creators," Yahoo said.
"David Karp is one of the most inspiring, insightful entrepreneurs that I have ever met," said Mayer, who worked closely with Google co-founders Larry Page and Sergey Brin during her time at the company.
Tumblr will fill Yahoo's gaping void in the realm of social media. Yahoo so far has had to connect its services to Facebook and Twitter to give its users a social networking outlet.
Tumblr, which will remain based in New York, has about 175 employees, while Yahoo has 11,300.
In his statement, Karp predicted Yahoo would help Tumblr grow even faster as he strives "to make the Internet the ultimate creative canvas."
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