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.

Yahoo is close to selling its Zimbra unit to VMware, according to several sources close to the situation.

Sources said the deal could be announced soon, but the price for the open-source email unit was still unclear.

But the price, sources said, is much lower than what Zimbra fetched when Yahoo bought the Silicon Valley start-up in late 2007 for $350 million.

Yahoo has been trying to sell Zimbra for some months now, but it had not attracted enough substantive bidders. According to one source, Yahoo (YHOO) CEO then approached VMware (VMW) CEO Paul Maritz, whom she knows well from their years as tech execs.

Bartz ran Autodesk (ADSK) for many years and Maritz was a longtime top exec at Microsoft (MSFT).

One source noted that the reason that VMware was interested in nabbing Zimbra was that its execs want to
expand “up the stack” from the software company’s position in virtualization.

BoomTown reported in late September that Zimbra was for sale by Yahoo, which has been targeting assets for “de-acquisition” that are not central to the strategies of its new management.

Late last year when announcing its new $100 million marketing campaign, 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 that with several properties, such its JumpCut video editing service.

But Zimbra, as well as its small business and jobs sites have been on the block.

The sale of Zimbra will present a possible complication, since its innovative technology has been integrated–although not as extensively as some have felt it should be–into Yahoo’s popular email offering. But the Yahoo could easily license what it needs as part of the deal with VMware.

But, sources said, Yahoo is now not 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).

Yahoo declined to comment and emails sent to VMware have gone unanswered as yet, but source expect an announcement within two weeks.

You could see this one coming a mile out: After telling users they could not upload new videos late last year, Yahoo is finally shutting down Jumpcut.

“This was a difficult decision to make, but it’s part of the ongoing prioritization efforts at Yahoo!,” said Jumpcut in a note to users today.

That’s code for the stylings of new CEO Carol Bartz, who is hard at work axing many of Yahoo’s similarly lagging services.

She has reportedly been readying plans to sell off Yahoo’s lackluster HotJobs employment listing service, for example. And there will surely be more to come, from the many companies Yahoo has gobbled up in the last few years and has done nothing much with.

Such as the sassy video editing service, which was bought by Yahoo in 2006 amid high hopes of the Internet giant becoming a big player in the hot online video market.

That honor, as it turned out, went to YouTube, which was more cats-on-skateboards-oriented than tools-oriented.

Yahoo (YHOO), ironically, was poised to buy YouTube in the month after it grabbed Jumpcut, until it was snatched away in a last-minute acquisition grab by Google (GOOG).

Now, Jumpcut is a wrap.

Curiously, Yahoo is making users download the videos to their computers, and then suggests they upload them to another Yahoo property, Flickr, which now allows video.

Why the company doesn’t just let people migrate the videos is probably due to the silos of tech at Yahoo, which are infamous and which the company is trying to fix.

But not today.

Thus, Jumpcut sent this note to its customers:

Dear Jumpcut user,

After careful consideration, we will be officially closing the Jumpcut.com site on June 15, 2009. This was a difficult decision to make, but it’s part of the ongoing prioritization efforts at Yahoo!

Very soon, we’ll be releasing a software utility that will allow you to download the movies you created on Jumpcut to your computer. We’ll send instructions to this email address when the download utility is available.

Once you download your movies, you may choose to upload them to another site such as Flickr, which now allows video uploads. You can find out more here: http://www.flickr.com/explore/video/

Thanks for your understanding and thanks for being a part of Jumpcut.

The Jumpcut Team

And, for a trip down memory lane to happier times, here is the memo Yahoo wrote when it bought the San Francisco start-up:

SEPTEMBER 27, 2006

Jumpcut Joins the Yahoo! Video Family

Yes it’s true!

Jumpcut just announced they’ve agreed to join us, which will make Yahoo! Video an even better place for people to create, share, and discover great video online. If you haven’t heard of Jumpcut, it’s a San Francisco-based startup that has a passionate community of users and a great suite of online video editing capabilities.

Ever since Yahoo! Research Berkeley launched the International Remixer, our interest in this space has been pretty clear–we couldn’t stop talking about how cool it is to mashup multimedia of all kinds.

So needless to say, we are very happy to have Jumpcut join the Social Media group here. They’ll be bunk-mates with Flickr, and just around the virtual corner from Delicious, and Upcoming.

Please head over to Jumpcut’s blog for the official word.

Jason Zajac
VP Social Media