Yahoo to buy e-mail software maker Zimbra

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Yahoo Inc. is buying e-mail service Zimbra Inc. for $350 million in an all-cash deal that may open a new revenue channel for the slumping Internet icon. The acquisition announced Monday represents Yahoo's second significant expenditure this month as co-founder Jerry Yang spearheads an effort to breathe new life into the Sunnyvale-based company.
Two weeks ago, Yahoo disclosed plans to buy an Internet direct marketing network, BlueLithium, for $300 million. That purchase marks another step in Yahoo's attempt to sell more advertising on other Web sites besides its own, hoping to boost its sagging profits.
With the Zimbra purchase, Yahoo appears poised to branch in a new direction that may intensify the company's already fierce competition with rivals Microsoft Corp. and Google Inc.
San Mateo-based Zimbra specializes in selling e-mail software and hosting services to businesses, universities and Internet service providers.



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