Microsoft Corp. is in talks to buy enterprise social network vendor Yammer, and it may reach an agreement to acquire the company by the end of the week, Bloomberg reported on Thursday, June 14, citing two people familiar with the matter.
According to one of the sources, Microsoft may pay more than $1 billion to acquire Yammer, and the two companies may reach a deal as soon as Friday, June 15. Bloomberg's source spoke under condition of anonymity because the negotiations are private.
Microsoft is the world's largest software maker and offers a broad suite of products to its enterprise customers. Such an acquisition would help the company add social-networking tools to the range of products it already offers, and it would also step up its game against rival Salesforce.com Inc. Salesforce recently added social-marketing tools through its $745 million acquisition of Buddy Media Inc. earlier this month. Meanwhile, Oracle Corp, also a major competitor, has recently purchased Vitrue Inc. and Collective Intellect Inc., two companies that analyze data on social media sites.
Enterprise social network operator Yammer was founded in 2008, and is currently used by more than 200,000 companies, including heavy players such as Ford Motor Co. and EBay Inc. Yammer provides social networking features similar to those found on Facebook's social network, but with a different target: internal corporate use.
The startup based in San Francisco was founded by PayPal Inc's former chief operating officer David Sacks, and has raised more than $140 million in funding from various venture firms, including Charles River Ventures Inc. and Emerging Capital Partners, according to Bloomberg.
Meanwhile, ZDNet's Mary-Jo Foley points out that the potential motivation behind Microsoft's intention to buy Yammer seems very similar to the lead-up to the Skype acquisition. "Microsoft already has technology inside its SharePoint collaboration product that is focused on Skype," notes Foley. "But that technology isn't lightweight and still has little recognition outside the SharePoint community. (In fact, Microsoft and Yammer announced a deal last year to add a Yammer Web Part to SharePoint to make SharePoint more 'social, mobile and engaging for enterprise employees.')"
The software giants are racing to add more social feeds to their CRM offerings to stand out from the competition, and Yammer may help Microsoft to step up its game. In addition, Yammer is already integrated with Microsoft CRM and supports all the leading mobile platforms. In fact, it supports even Windows Phone. Such an acquisition would make sense for several reasons, and it would likely be a welcome addition to the software maker.
However, Microsoft spokesman Frank Shaw declined to comment on a potential deal, as did Yammer spokeswoman Deanna McPherson. So for now, there is nothing official.
