Yahoo’s Acquisition of Zimbra: The Rationale & Numbers


So Yahoo’s (NSDQ: YHOO) recent acquisition of e-mail and communication suite Zimbra is making some people scratch their heads: they are skeptical about Yahoo’s capacity to serve enterprise customers and suspicious about Yahoo’s plans for the Zimbra, as this PCWorld story documents. Satish Dharmaraj, Zimbra’s co-founder and CEO, tried to allay some of these fears: Yahoo will not dismantle Zimbra to boost Yahoo Mail. “If Yahoo wanted the people and the technology to bolster the Yahoo consumer mail group, $350 million is a lot to pay,” Dharmaraj said. “We’re going to be kept whole as a business unit and we’ll execute on our current strategy,” he added.

Meanwhile, Doug Anmuth, the Lehman Brothers analyst who cover Yahoo, came out with a research note this Friday, and tackles the allure of online SMB apps for the online companies like Yahoo, Google (NSDQ: GOOG) and others. Some numbers and conclusions from him:
— We believe Google Apps could generate $400 million in revenue in 2010. However, we believe there could be considerable upside based on Google’s ability to penetrate larger enterprise customers.
— We also believe that greater enterprise adoption of Google Apps, for example, likely creates a halo effect around Google

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