Microsoft buys Yammer for $1.2bn

The software giant has bolstered its cloud offering by gobbling up the closed social network for enterprise, Yammer.

by Rebecca Burn-Callander
Last Updated: 19 Aug 2013
First Facebook paid $1bn for Instagram, now Microsoft has upped the ante with £1.2bn for Yammer. The price-tag on these social start-ups is going through the roof.

At least Yammer has a revenue model. According to Microsoft, more than five million corporate users send messages on the tool. Some of these will be using the basic service for free but many have opted in for a premium account, paying $5 per month for the priviledge. And these users have quite the pedigree - 85% of Fortune 500 companies are represented amongst Yammer’s office-bound scribblers.

Microsoft has called Yammer the ‘perfect fit’ for its cloud plans, and plans to bolt on the service to its Office 365 offering, integrating it into Microsoft Office and Skype. The software maker has lagged behind the likes of Salesforce, Oracle, Cisco and IBM in the social sphere, but Yammer’s ready-made user base will give it an instant leg up.

Yammer's CEO David Sacks said of the deal: ‘When we started Yammer four years ago, we set out to do something big. We had a vision for how social networking could change the way we work. Joining Microsoft will accelerate that vision and give us access to the technologies, expertise and resources we'll need to scale and innovate.’

Investors aren’t as impressed with the Microsoft acquisition, however. The Washington tech giant's stock price fell following the announcement – presumably as traders stared at their screens mouthing ‘How much?!’ – closing at $29.86, a loss of 2.7 percent.

 

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