Kara Swisher

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Exclusive: VMware Likely to Buy Zimbra From Yahoo


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.