Shares of Microsoft (MSFT) are down $1, or 3.3%, at $29.70 after the company this afternoon said it would pay $1.2 billion in cash to acquire privately held enterprise social networking startup Yammer, which claims 5 million corporate users of its software.
Yammer competes with corporate social networking offers from the likes of Salesforce.com (CRM), Tibco (TIBX), and Jive Software (JIVE), which is about as close as you can get at this time to a “pure play” on corporate social networking.
Shares of Jive are down 75 cents, almost 4%, at $19.74, although it actually rose off of a low of $19 for the day.
Update: Nomura Equity Research‘s Rick Sherlund this afternoon reiterated a Buy rating on Microsoft shares and a $37 price target. He notes that Yammer is already being used within Microsoft’s “Sharepoint” collaborative suite of software.
Writes Sherlund, “We view the move as strategic, complimentary, and market-expanding for Microsoft”:
Valuation is rich given what we estimate was $15-20mn in revenues last year, although Microsoft is buying time-to-market and the benefits from scaling and monetizing Yammer across its broader Office suite, particularly with Office 365, SharePoint, and possibly its Dynamics CRM/ERP solutions and Skype.”
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