It’s been a busy weekend of buyout speculation for Yahoo! Inc. (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! Inc. (NASDAQ:YHOO)’s board really meeting today — on a Sunday — to approve the proposed $1.1 billion purchase? Will Facebook Inc (NASDAQ:FB) and Microsoft Corporation (NASDAQ:MSFT) jump in as potential suitors? Can Yahoo! control the rampant porn? Is Yahoo! Inc. (NASDAQ:YHOO) 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 Inc (NASDAQ:FB) or Microsoft Corporation (NASDAQ:MSFT) would buy Tumblr.
Why would Facebook Inc (NASDAQ:FB) 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 Inc (NASDAQ: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 Inc (NASDAQ:FB) to buy Tumblr, Inc.’s angst-riddled haven of youth would be like seeing eBay Inc (NASDAQ: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 Corporation (NASDAQ:MSFT) seems equally out of place on the front porch as a gentleman caller wooing Tumblr. In its present form, Tumblr, Inc. 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 Corporation (NASDAQ:MSFT) 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, Inc. away from Yahoo! Inc. (NASDAQ:YHOO) would create even more friction in the already tenuous relationship, with Microsoft Corporation (NASDAQ:MSFT)’s Bing taking over Yahoo! Inc. (NASDAQ:YHOO)’s search business. Mr. Softy can do a lot of dumb things, but it’s not stupid enough to hit on Yahoo!’s girl.