Yahoo Will Announce Zimbra Sale to VMware Tomorrow, as It Considers Bids for Small-Biz Unit
Yahoo is set to announce the sale of its Zimbra open-source email unit to VMware tomorrow, said sources, for a figure north of $100 million but below the $350 million the company paid for the unit in late 2007.
A week ago, BoomTown reported that the sale of Zimbra was likely.
Sources said there is a large employee-retention element to the sale to encourage Zimbra’s talent to make the move to VMware, as well as full retention of intellectual property by Yahoo for technology used in its email products. There will be ongoing IP giveback to VMware (VMW) over a period of time.
In addition, other sources said that Yahoo (YHOO) is about to consider bids it has solicited for its small business unit, which the company has also been trying to sell for some months.
Sources added that Yahoo will not sell the unit if it can’t get a decent price for the division, which is estimated to be worth many hundreds of millions of dollars.
When queried about the sale of Zimbra, Yahoo released this statement:
“We do not comment on rumors or speculation. Zimbra plays an important role today in the company’s communications services. Zimbra technologies have played and will continue to be integral to our leading Yahoo! Mail and Calendar offerings and a key differentiator for the company.”
BoomTown reported in late September that Zimbra was for sale by Yahoo, which has been targeting for “de-acquisition” assets that are not central to the strategies of the company’s new management.
Late last year when announcing its new $100 million marketing campaign, Yahoo CEO Carol Bartz said at a media briefing, “Most of our assets are very core to the company. Those that aren’t, where it makes sense we will sell and where it makes sense we will shut down.”
Yahoo has done just that with several properties, such as its JumpCut video-editing service.
But Zimbra, as well as its small business and jobs sites, have been on the block.
One source noted that the reason VMware was interested in nabbing Zimbra is that its execs want to expand “up the stack” from the Silicon Valley software company’s position in virtualization.
And Yahoo is no longer interested in running Zimbra’s white-label, open-source email commercial product, which serves the university and ISP markets. There, its main rival has been Google (GOOG).
VMware has not replied to an email query.