Yahoo brings Tumblr closer to the fold

Almost two years after acquiring Tumblr, Yahoo (YHOO) is moving to integrate the popular blogging site more closely with the rest of its operations.

Under a management reorganization announced this week, Tumblr CEO David Karp, who started the blogging service in 2007, will now report to Simon Khalaf instead of directly to Yahoo CEO Marissa Mayer. When she acquired Tumblr for $1.1 billion back in May, 2013, Mayer had promised "not to screw it up" by letting Karp continue to run the site independently.

Tumblr has grown more than 50% since the acquisition to 460 million users at the end of last year, most of whom use the site to post personal blogs. Yahoo has been increasingly adding advertisements amidst the Tumblr posts and Mayer said in February that the site was on track to reach $100 million in revenue this year. "We're starting to see really strong business results," she said at a Goldman Sachs conference on February 11.

Khalaf joined Yahoo last year when Mayer acquired his mobile analytics company, Flurry. As part of the new reorganization, Khalaf was promoted to senior vice president overseeing all of Yahoo's publisher products including news, sports and finance.

Yahoo spokeswoman Carolyn Clark confirmed the Karp change was part of a "a number of organizational shifts" made to focus the company's efforts more on mobile, video, social and native advertising efforts.

"As we continue to look at ways to accelerate our growth, aligning our product teams to enable tighter collaboration is critical to drive innovation," Clark said in a statement.

Yahoo had already said that it was integrating Tumblr's sales staff with its own. "Our focus is going to be to do more consolidation of our sales functions across the board," CFO Ken Goldman said last month at a Morgan Stanley investor conference. "And so lots of the Tumblr sales will now be integrated, if you will, with the Americas sales."

Shares of Yahoo, the parent of Yahoo Finance, dropped 1% on Friday and have lost 11% so far in 2015. Much of the stock's loss followed the sinking share price of Chinese e-commerce giant Alibaba (BABA), which has seen its shares drop 19% this year. Yahoo still holds a 15% stake in Alibaba, though it has announced plans to spin it off in a tax-free distribution to shareholders later this year.