Yahoo to buy Zimbra for $350m

[Brett_Tabke]

Yahoo Inc. (Nasdaq:YHOO - news)/span>. is buying e-mail service Zimbra Inc. for $350 million in an all-cash deal that may open a new revenue channel for the slumping Internet icon.

The acquisition announced Monday represents Yahoo's second significant expenditure this month as co-founder Jerry Yang spearheads an effort to breathe new life into the Sunnyvale-based company.

[news.yahoo.com...]

[mrMister]

I'm still annoyed from when Yahoo! bought Rocketmail and ruined it!

Why can't they just leave good companies alone! :(

[Receptional]

Privately held Zimbra doesn't disclose its revenue. Ferris estimated Zimbra's annual revenue range between $10 million and $20 million, figures that indicate Yahoo is paying a steep price.

Now - I understand "revenue" to mean "the entire amount of income before any deductions are made"... aka turnover.

This company has 100 employees. Let's say they are employees at $30,000 a pop. My business degree says double the wage bill for a realistic idea of labour related overheads - that's $6 million.

So at best we are estimating income before tax of $14 million and a sale price of $350 million in cash. That's 25 times gross profit!

How on earth do Silicon Valley investors continue to get out of bed in the morning with valuations like that? I just found out I am truly a MULTI MILLIONAIRE...
(...on paper...!)
There has to be something missing in that AP report... like the value of their client mailing list data perhaps?

Dixon.

[WiseWebDude]

Wow, looks like Yahoo is in a buying frenzy these days. A company trying to do better, or a rabid dog backed into a corner?

[WiseWebDude]

I read this article on Yahoo site (link above) and Yahoo can't even get their own page right, it is all messed up with an unclosed </span> tag. I would tell them, but of course they don't allow contact...they too busy running around buying stuff instead of fixing what's there now is my point.

I just check the stocks and Google is killing Yahoo to be sure.

YHOO: $25
GOOG: $525

no wonder Yahoo is freaking out.

[edited by: WiseWebDude at 1:14 pm (utc) on Sep. 18, 2007]

[testing0]

What the hell :D

I never heard about a company named Zimbra and they buy it $350m!

[Mr Bo Jangles]

I never heard about a company named Zimbra and they buy it $350m!

Anybody that's got half a finger on the webpulse knows about Zimbra.

[davec]

I've obviously not got a finger on the pulse as I'd never heard of them either - until now of course.

<edit - just been to the site, my favourite thing is that their site search is powered by google. hmmm, wonder how long that will last!>

[bcolflesh]

Zimbra was a nice solution if you didn't want/need to go the MS Exchange route.

[Sylver]

Valuation based only on current revenu is perhaps not the best system in this case

They claim 9 million paid mailboxes and a 70% growth since March this year. Their mainline business is very similar to Yahoo's.

The price tag seem pretty high IMHO, but on the other end, we don't have all the data in hand and perhaps, once you check it out, the deal is not that bad.

[JS_Harris]

It's valuation 2.0

- how much YOU can make from a project is more important than how much money it is making.
- how much YOU can improve your market share by absorbing the competition.
- how much your existing infrastructure can reduce the operating costs of the project itself.

A lot of things go into major purchase decisions, imagine if another company had snapped up a young Google... sometimes not buying the competition when you have a chance is bad news for the long term.

Time will tell.