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Tumblr isn't making much money...yet

As many people in Texas already know, the internet world is abuzz this month after Yahoo announced its possible plans to buy Tumblr for a jaw dropping $1.1 billion in cash. While business experts point out that Tumblr doesn't make a lot in profits, that could soon change for the blogging platform if Yahoo follows through with its plans to acquire the company.

If the deal is made, it will be considered the largest business acquisition of a social networking site, even surpassing Facebook's $1 billion purchase of Instagram in 2012. The purchase would also boost Yahoo's prestige, which is something its Chief Executive Marissa Mayer has been trying to do for quite some time now.

Yahoo's desire to get involved in the social networking revolution seems to be a good way for Mayer to breathe new life into the company. Financial experts point out that while Tumblr may not be making very much money at this time, it's incredibly rich in user volume and activity. With more than 108 million blogs on the site, the acquisition could help Yahoo surpass its competitors like Bing and Google by drawing in the younger crowd.

But with the promise of an acquisition also comes the uncertainty. Although Yahoo has made it clear that it wants to reposition itself in the technology market by breaking into social media, the company must still compete with its competitors for the bid. Whether this skyrockets the price tag on Tumblr or not, tough negotiations could be in Yahoo's future and many are wondering how badly the company wants to take that risk.

Source: The New York Times, "Yahoo to Buy Tumblr for $1.1 Billion," Michael J. de la Merced et al, May 19, 2013