The Trouble With Tumblr

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

It's been a busy weekend of buyout speculation for Yahoo! (NASDAQ: YHOO  ) . Will it buy Tumblr? Will it not buy Tumblr? Is the dot-com dino buying a site that's missing the "e" because its own growth catalysts have been stuck on "E" for years aside from Asian asset sales?

All Things D broke the story, and it wasn't long before the rumor started going in different directions.

Is Yahoo!'s board really meeting today -- on a Sunday -- to approve the proposed $1.1 billion purchase? Will Facebook (NASDAQ: FB  ) and Microsoft (NASDAQ: MSFT  ) jump in as potential suitors? Can Yahoo! control the rampant porn? Is Yahoo! overpaying? Will Tumblr hold out for more?

I don't have any fuel to add to this fire. I -- unlike like Tumblr -- am not missing an "E" on that front. I don't have unnamed sources. I don't have my ear to the ground. I'm a distant observer with the same concerns and excitement surrounding another potential 10-figure dot-com deal.

Having a long-distance relationship with this relationship has its benefits. I can laugh at the notion that Facebook or Microsoft would buy Tumblr.

Why would Facebook snap up the graphics-intensive website? The Instagram purchase made sense for the world's leading social-networking website operator because it was the fast-growing photo-sharing platform of choice, threatening its own option. It's the "kill 'em in the crib" mentality that drives so many deals. That was eBay buying PayPal. That was Avis buying Zipcar. That was Yahoo! trying to buy Facebook a few years ago in a deal that could've changed everything.

For Facebook to buy Tumblr's angst-riddled haven of youth would be like seeing eBay buy all of Craigslist or having Avis drive around and pick up hitchhikers. Yes, a lot of its users have Tumblr microblogs and share them virally on the site, but it's not the kind of thing that shareholders would want to see invited in to the Facebook family.

Microsoft seems equally out of place on the front porch as a gentleman caller wooing Tumblr. In its present form, Tumblr is tough to monetize. It's a Catch-22. You would have to clean up Tumblr to attract advertisers, but cleaning up Tumblr would send its traffic scurrying off elsewhere. Microsoft always comes up as a potential suitor because it has a lot of money, and it has a history of cutting big checks on bad deals. More importantly, stealing Tumblr away from Yahoo! would create even more friction in the already tenuous relationship, with Microsoft's Bing taking over Yahoo!'s search business. Mr. Softy can do a lot of dumb things, but it's not stupid enough to hit on Yahoo!'s girl.

The only Internet juggernaut that would seem to make sense as a rival bidder would be Google (NASDAQ: GOOGL  ) -- if it wasn't busy trying to make nice with Yahoo! these days.

Big G knows all about monetizing the un-monetizable. What did it do with Blogger? What did it do with YouTube? Google acquired the magnetic properties, but it didn't mess with the thermostat. The world's largest online advertising company simply gave its users the option to cash in on cleaning up the joint. Through AdSense for Blogger users and the YouTube partners program, Google left it up to users to decide if they wanted to clean up their own blogs and channels in pursuit of the almighty revenue share.

One can argue that this will be the only way Yahoo! can make this work -- empowering Tumblr users with dreams of dollar signs -- but it shut down its own small publisher-facing Google AdSense clone three years ago.

Then again, Yahoo! didn't have a former Google exec at the helm then. Let's see where things go this time.

I'll Tumblr 4 Ya
It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged among the five kings of tech. Click here to keep reading.

Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2439820, ~/Articles/ArticleHandler.aspx, 9/25/2016 11:52:05 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,261.45 -131.01 -0.71%
S&P 500 2,164.69 -12.49 -0.57%
NASD 5,305.75 -33.78 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/23/2016 4:00 PM
YHOO $42.80 Down -1.35 -3.06%
Yahoo CAPS Rating: **
FB $127.96 Down -2.12 -1.63%
Facebook CAPS Rating: ***
GOOGL $814.96 Down -0.99 -0.12%
Alphabet (A shares… CAPS Rating: *****
MSFT $57.43 Down -0.39 -0.67%
Microsoft CAPS Rating: ****