VMware Inc. announced that it would buy Yahoo's e-mail technology unit Zimbra. However, it did not reveal how much it would pay for Zimbra, which creates e-mail and office collaboration software.

Though the financial details of the deal were not revealed, but reports published in the Wall Street Journal claimed that the sales price would be less than the $350 million Yahoo paid for Zimbra in
2007.

Under the terms of the deal, Yahoo will keep on using the Zimbra technology in Yahoo Mail and Yahoo Calendar.

The deal is expected to close in the running quarter.

VMware, the leading producer of programs which allow computers to run operating systems, is expected to report a year-on-year rise of 7 per cent in fourth quarter sales.

Yahoo is trying to reduce costs by offloading non-core assets to get back on a growth track.

In the after-hours trading, shares in VMware shed 0.6 per cent to $44.34, while shares in Yahoo jumped 1 cent to $16.69.