Microsoft buys ad firm for $6bn

[steven8]

"There had to have been some desperation for Microsoft to pay the price that it did," said Morningstar analyst Toan Tran.

"Sometimes, I am worried that Microsoft has Google-tunnel vision. It's so worried what Google is doing that it becomes way too reactionary," he added.

From the BBC:



Microsoft buys ad firm for $6bn

Microsoft chief Bill Gates
It is hoped the deal will strengthen Microsoft's internet business
Microsoft is paying $6bn (£3bn) to buy digital marketing firm Aquantive in its biggest ever acquisition.

The all-cash takeover will allow Microsoft to expand into the highly lucrative internet advertising market, that Google and Yahoo have targeted.

Aquantive advises agencies and website publishers on putting adverts online, connecting buyers and sellers.

The $66.50 per share offer is 85% higher than Aquantive's Thursday closing price of $35.87.

'New level'

"This deal takes our advertising business to a new level," said Kevin Johnson, head of Microsoft's platforms and services division.

"We are committed to earn a bigger slice of the £40bn pie that's growing."


There had to have been some desperation for Microsoft to pay the price that it did
Toan Tran, Morningstar analyst

See Aquantive's share price
See Microsoft's share price

Microsoft is the latest technology firm to pounce on the shrinking independent online advertising sector.

Last month, search engine giant Google agreed to buy DoubleClick for $3.1bn, while Yahoo snatched the 80% of Right Media Exchange it did not already own for $680m.

Price justified?

Microsoft justified the expensive price tag - which represents 2% of its market value - by arguing the complementary technology of Aquantive was worth it.

But analysts are sceptical.

"There had to have been some desperation for Microsoft to pay the price that it did," said Morningstar analyst Toan Tran.

"Sometimes, I am worried that Microsoft has Google-tunnel vision. It's so worried what Google is doing that it becomes way too reactionary," he added.

Aquantive, which has about 2,600 employees, will continue to operate from Seattle as part of Microsoft's online operations.

It will help the software giant broaden the scope of services its MSN consumer internet unit can offer.

The deal is expected to be completed in the first half of 2008, subject to regulation.

Shares in Aquantive shot up 78% to $63.79 in Friday trading on the technology-dominated Nasdaq index, while Microsoft shares fell 0.5% to $30.83.

http://news.bbc.co.uk/2/hi/business/6670227.stm

[starcraft.man]

I agree with the two lines you quoted at the top. I was reading about this a bit over the past week and MS must be losing its own mind at the top. It is burying itself by squandering its money. The simple truth is that Google ad sense already dominates the internet advertising market, and yahoo adverts pick up whatever slack/scraps are left over. MS hasn't the brilliance or ability to compete in a market they can't rig or bully, thats the simple truth of it all. MS has consistently shown that when it tries to enter a competitive market, it produces nothing but a sub-par/mediocre product that those who wish the best ignore (see Virtual PC, Zune, frontpage, now MS ads). Google (sad as it may be) more or less owns the internet scene, if MS was smart they would cancel the deal now and save their assets.

I'm not particularly worried though, to me its just 6 billion down the drain for MS, and since I'm fairly confident they are losing money on vista... maybe this is just one move closer to the end?

[KiwiNZ]

MS losing money , Have you not seen their latest results?
Vista is a license to print money for them.

As for the acquisition , I love the way press supposition becomes de'facto fact .:rolleyes:

[starcraft.man]

MS losing money , Have you not seen their latest results?
Vista is a license to print money for them.


If you refer to the 40 million licenses sold, you should be careful and read this article. (http://www.microsoft-watch.com/content/vista/vista_40_million_sold.html?kc=MWRSS02129TX1K000053 5) The basic points are the following:

1) Vista license sales do not represent actual sales but "In Channel" sales to OEM manufacturers. They could very well stay in a box in the OEM for life, they would still represent licenses put in channel and MS would say they are selling well.

2) The number equally does not represent actual users of Vista, in fact, it may represent a good portion of XP users, consider that if you buy a computer now it will come with Vista installed (most likely). If you then phone MS or by some other means downgrade, MS will still count your purchase as a Vista sale. So once again, success is not measured by the number. In truth many people I know who bought a computer found vista to be incompatible with some of their hardware (or some even plain didn't like the changes) then downgraded. Not to mention many businesses/governments have said no to vista simply because it offers nothing improved over XP (assuming existing XP computers are secured by a good IT staff) and when they buy new machines, put XP on it.

3) And lastly, they have very much played with their numbers, putting profits offset from other quarters into later quarters in order to mask normal quarters.

Anyway, thats my opinion, your free to believe what you want but I can't believe that Vista is doing so well, my personal experience (and those around me) and papers I've read from MS independent people say otherwise (no MS watch is not the only place I read).

Anyway, I digress, there are people to help today... and I've posted enough in the cafe I think. Off I go >.>.