Yahoo announced Monday that it has agreed to buy Zimbra, a maker of Web-based e-mail software, for $350 million in cash.
United States of America (Press Release) September 19, 2007 --
Yahoo announced Monday that it has agreed to buy Zimbra, a maker of Web-based e-mail software, for $350 million in cash, providing the clearest indication yet of how the Internet giant is changing course to compete against rivals like Google.
While Yahoo Mail is one of the top online e-mail services in the world, with 250 million users, its powerful infrastructure is used by only a handful of corporate giants.
This has left the little guys for Google, which has been aggressively marketing Google Apps, a package of online software that includes e-mail, calendar, word-processing and spreadsheet applications, to small and medium-size businesses.
It turns out those customers are also Zimbra's sweet spot. The San Mateo company provides "white-label" e-mail for more than 1,300 customers, ranging from start-ups like Digg to giants like Raytheon and Comcast. (White label means the service does not carry the Zimbra brand.)
Brad Garlinghouse, a senior Yahoo executive who became famous last year for openly criticizing his company's lack of direction and focus, will supervise Zimbra after the acquisition. He said Zimbra extends Yahoo's core strength in e-mail while adding flexibility. Customers can easily customize Zimbra, which is built on open-source software, so that it integrates with nearly any in-house application.
Meanwhile, hidden from view will be Yahoo's industrial-strength storage architecture.
After the deal closes, Zimbra and its 50-plus employees will become part of Yahoo, with Satish Dharmaraj, co-founder and chief executive, reporting to Garlinghouse.
At a time when Yahoo has been struggling to attract technical talent, which tends to first gravitate to Google, Zimbra will bring in expert and innovative engineers, according to venture capitalists who bankrolled the start-up. "Yahoo acquired one of the most incredibly talented teams in this category in Silicon Valley by far," said Tim Haley of Redpoint Ventures.
The deal marks the third major purchase by the Sunnyvale company since co-founder Jerry Yang was named chief executive in June. A few days after that, Yahoo said it would buy Rivals.com, a network of sites providing information on college and high school sports.
Earlier this month, Yahoo said it would buy BlueLithium, a digital marketing company, for $300 million in cash. Together with Yahoo's $680 million purchase in April of Right Media, an online advertising exchange, the BlueLithium deal should help Yahoo increase the amount of targeted advertising it sells to other Web sites.
Yahoo has been working on expanding its reach beyond its own Web properties for more than a year in a string of deals that include eBay, Comcast, hundreds of U.S. newspapers and Bebo, a top social networking site in the United Kingdom.
"I think a lot of these moves are positives ones, but it's way too early to tell" if Yahoo has successfully turned around, said Scott Kessler, an analyst with Standard & Poor's.
Since January 2006, Yahoo's stock has lost more than 40 percent of its value. And doubt in the company's ability to capitalize on its huge audience intensified earlier this year after the rollout of new advertising technology was repeatedly delayed.
Meanwhile, outsiders continue to criticize Yang for failing to make bold moves. Jeffrey J. Lindsay, an analyst with Sanford C. Bernstein, released a research note Friday titled: "YHOO: Bottom of the 9th and Bases Loaded - Yang Steps Cautiously to the Plate - Will He Strike Out?"
"We think Yahoo has little time for a gradual strategy," Lindsay wrote. He said Yang should consider outsourcing paid search advertising to Google or Microsoft or drastically cutting Yahoo's head count.
Author: Elise Ackerman
Source: http://www.mercurynews.com/
While Yahoo Mail is one of the top online e-mail services in the world, with 250 million users, its powerful infrastructure is used by only a handful of corporate giants.
This has left the little guys for Google, which has been aggressively marketing Google Apps, a package of online software that includes e-mail, calendar, word-processing and spreadsheet applications, to small and medium-size businesses.
It turns out those customers are also Zimbra's sweet spot. The San Mateo company provides "white-label" e-mail for more than 1,300 customers, ranging from start-ups like Digg to giants like Raytheon and Comcast. (White label means the service does not carry the Zimbra brand.)
Brad Garlinghouse, a senior Yahoo executive who became famous last year for openly criticizing his company's lack of direction and focus, will supervise Zimbra after the acquisition. He said Zimbra extends Yahoo's core strength in e-mail while adding flexibility. Customers can easily customize Zimbra, which is built on open-source software, so that it integrates with nearly any in-house application.
Meanwhile, hidden from view will be Yahoo's industrial-strength storage architecture.
After the deal closes, Zimbra and its 50-plus employees will become part of Yahoo, with Satish Dharmaraj, co-founder and chief executive, reporting to Garlinghouse.
At a time when Yahoo has been struggling to attract technical talent, which tends to first gravitate to Google, Zimbra will bring in expert and innovative engineers, according to venture capitalists who bankrolled the start-up. "Yahoo acquired one of the most incredibly talented teams in this category in Silicon Valley by far," said Tim Haley of Redpoint Ventures.
The deal marks the third major purchase by the Sunnyvale company since co-founder Jerry Yang was named chief executive in June. A few days after that, Yahoo said it would buy Rivals.com, a network of sites providing information on college and high school sports.
Earlier this month, Yahoo said it would buy BlueLithium, a digital marketing company, for $300 million in cash. Together with Yahoo's $680 million purchase in April of Right Media, an online advertising exchange, the BlueLithium deal should help Yahoo increase the amount of targeted advertising it sells to other Web sites.
Yahoo has been working on expanding its reach beyond its own Web properties for more than a year in a string of deals that include eBay, Comcast, hundreds of U.S. newspapers and Bebo, a top social networking site in the United Kingdom.
"I think a lot of these moves are positives ones, but it's way too early to tell" if Yahoo has successfully turned around, said Scott Kessler, an analyst with Standard & Poor's.
Since January 2006, Yahoo's stock has lost more than 40 percent of its value. And doubt in the company's ability to capitalize on its huge audience intensified earlier this year after the rollout of new advertising technology was repeatedly delayed.
Meanwhile, outsiders continue to criticize Yang for failing to make bold moves. Jeffrey J. Lindsay, an analyst with Sanford C. Bernstein, released a research note Friday titled: "YHOO: Bottom of the 9th and Bases Loaded - Yang Steps Cautiously to the Plate - Will He Strike Out?"
"We think Yahoo has little time for a gradual strategy," Lindsay wrote. He said Yang should consider outsourcing paid search advertising to Google or Microsoft or drastically cutting Yahoo's head count.
Author: Elise Ackerman
Source: http://www.mercurynews.com/
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