Arik Hesseldahl

Recent Posts by Arik Hesseldahl

Yammer Acquisition Rumors Push Jive Shares Up

“Buy on the rumor; sell on the news.”

That’s an old Wall Street saying that sums up with surprising accuracy the behavior of investors in the presence of uncertain rumors in the marketplace. The rumor in this case is the intention of the software giant Microsoft to acquire the enterprise social collaboration player Yammer for a price said to be in the neighborhood of $1 billion or slightly higher.

It is, as I argued in the wee hours of this morning, a plausible, if not a believable, rumor.

The spillover effect on rival Jive Software has been pronounced. Its shares rose today by $1.60, or more than 9 percent, to $18.33 a share, and has pushed its market valuation to north of $1.1 billion. Though even at that level, Jive is trading at a 35 percent discount to its 52-week high. It held its IPO late last year.

Naturally, there’s some hope among Jive shareholders that if Yammer ends up in the hands of Microsoft, someone else — perhaps Oracle or SAP — might step in and take out Jive at a healthy premium. Oracle has been making moves in the social space, buying Collective Intellect and Vitrue.

At least there’s some basis for the speculation. A deal for one company in a space often leads to a deal for another. We saw this pattern clearly late last year and early this year with a spate of deals for cloud-based HR software companies. The first to go was SuccessFactors last December, which SAP acquired for $3.4 billion. Next was Taleo, which Oracle scooped up for $1.9 billion in February. Meanwhile, Workday, the cloud-based HR play started by two former PeopleSoft execs, is on its way to a fall IPO. The fall of one domino leads to another.

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There was a worry before I started this that I was going to burn every bridge I had. But I realize now that there are some bridges that are worth burning.

— Valleywag editor Sam Biddle