Yahoo Acquires Zimbra

Yahoo announced it will purchase Zimbra. Zimbra makes email and calendaring software, with access normally via an attractive Ajax-based Web client.

Zimbra has tried to persuade business users to migrate from incumbent systems such as Exchange and Notes/Domino. However, it has failed in this goal. The company has, however, had more success selling to service providers.

We haven't had an update recently from Zimbra, but we estimate revenues in the $10 million to $20 million region, with limited or no profitability. The firm has taken some $30 million in venture funding. Yahoo is paying $350 million for the firm, which is probably very generous, and a figure Zimbra shareholders should be delighted with.

Zimbra has an attractive hosted solution, and it makes sense for Yahoo to offer this. Presumably the acquisition, and the high price, is at least in part a response to Google's growing hosted email offering.

In addition, Yahoo has a substantial business teaming with telcos and ISPs, and presumably Zimbra will also be part of the offerings from these partnerships.

... David Ferris

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