Jive CEO Says Microsoft-Yammer Deal Has Clients Defecting

Jive Software Inc. Chief Executive Officer Tony Zingale said the number of calls he’s received from concerned Yammer Inc. customers has picked up in the two weeks since reports surfaced that Microsoft Corp. would buy his rival.

Like Yammer, Jive provides social-networking software for businesses, helping employees communicate with one another and collaborate on projects. Jive is older, bigger and still independent, while Yammer is now plagued by Microsoft’s struggle to build social products, Zingale said.

Microsoft said yesterday that it’s buying Yammer for $1.2 billion, 12 days after Bloomberg News and other outlets reported that an agreement was in the works. Zingale said the pace of inquiries from Yammer clients has increased as details of the Microsoft deal have been publicized. He’s now considering ways to capitalize on that interest by possibly offering incentives for Yammer users to make the switch.

“Clearly if the momentum in these kinds of calls pick up, we’ll structure something formally and offer it publicly to Yammer customers,” Zingale said. “Not everybody is a huge Microsoft fan.”

Jive rose 6 percent to $20.93 at the close in New York, valuing the Palo Alto, California-based company at $1.29 billion, just above what Microsoft is paying for Yammer. Jive has jumped 74 percent since the 11-year-old company sold shares to the public in December.

Joining Office

Yammer, based in San Francisco, will join Microsoft’s Office division, with its corporate micro-blogging tools being added to the SharePoint, Office 365 and Skype products. The Office division will report to Yammer CEO David Sacks, who founded the startup in 2008.

“We are not surprised that competitors are taking note of the deal because it offers greater choice and flexibility,” said Rich Adolph, a Microsoft spokesman. “Initial feedback from our customers has been enthusiastic.”

Yammer’s more than 200,000 customers include Ford Motor Co., EBay Inc. and LG Electronics Inc. The bulk of its clients use a free product, with 19 percent paying for the premium version, according to a May 14 report from BMO Capital Markets, comparing Jive and Yammer. Jive said in May that first-quarter revenue climbed 58 percent to $25.3 million, which is more than Yammer’s annual sales, BMO estimates.

“Jive and Yammer are at very different points in their evolution,” Karl Keirstead, a BMO analyst, wrote in the report.

Still, Zingale acknowledges that the acquisition may cause some prospective Jive customers to hold off until they see how Microsoft integrates Yammer. While Jive’s product works with SharePoint, there may be some people “hoping that Yammer-SharePoint might deliver something down the road,” he said.

Microsoft, based in Redmond, Washington, rose less than 1 percent to $30.02. The stock has gained 24 percent in the past year.

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