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Very un-Microsoft-ish to overpay to that extent.
It is called desperation!
It is called desperation!
Comment by Denis the SQL Menace — May 18, 2007 @ 8:19 am
No more desperate than Goolge over paying, if it fits....Buy It.
Now everybody is on notice: Microsoft really is serious about building an ad business.
Bear in mind, they're not just acquiring technologies: they're getting worldwide account presence, and above all the talent and experience of people who are at the top of the online ad game.
@1. Avenue A/Razorfish may be the most important part of this deal. It's the riskiest because (as Geert's post indicates) Microsoft will tend to view an ad agency as a foreign body and the antibodies may come forth to reject the transplant. But if Microsoft is serious about creating new value for advertisers, it needs to go beyond technology and users and learn to operate from the POV of advertisers.
Given the complete lack of any stated vision or direction, buying this company isn't all that different from them buying Chrysler: I doubt even they know what they'll do with it. The current strategy is to copy a lot of other people’s stuff (Apple: Vista; Google: Search). They’ve followed others into established markets before, to be sure, but then there was some direction to it. They’re just doing stuff to do stuff.
As a long time watcher of MS, I have to say it's pretty clear that Ballmer is grossly incompetent as a CEO. Carly Fiorina was sacked over her performance and he's done significantly worse for MS than she did for HP. The fact that he’s not been sacked speaks to a board that is failing its shareholders. And I think that’s the why of the stock price. It’s going nowhere because of a Ballmer tax. No one has faith in the value of the company under his leadership and they don’t think he’s going anytime soon because MS has a rubber-stamp board. Buying MS is essentially buying to hold until Ballmer is gone and someone with vision comes to the helm.
The words of Cromwell to the rump parliament apply to Ballmer and the board:
You have sat too long for any good you have been doing lately… Depart, I say; and let us have done with you. In the name of God, go.
Typically, though, Google has been paying in shares of its own stock, which are themselves wildly overvalued.
Microsoft, in contrast, at least according to the MSNBC article, is paying $6 billion in cash. For a company with reported 2006 profit of $54 million.
That, my friends, is a horse of a different color.
He spent some time talking about how advertising was our new business, how we had made so much progress with MSN (Live was just poppping up), and that we were going to be an advertising giant.
Of the 200 people in the room, I didn't hear anybody who thought this made any sense. We worked for a company that changed it's marketing strategy every few months, made gaffe after embarrassing gaffe in the marketplace, and routinely threw millions of dollars at launches with no real means of measuring what worked and what didn't.
From that perspective, buying a $54 million product for $6 billion makes perfect sense.
Comment by Phil — May 18, 2007 @ 10:45 am
I agree, it still doesn't change the fact that they overpaid for doubleclick.
Google is the darling right now,but I remain unconvinced of their long term prospects, they have to start adding to their buisness model soon, and showing profits outside of the add buisness.
Yet (hear me out) this is a smart STRATEGIC move by Microsoft, aQuantive is the tracking king, not only that, they will be able to "run the game" and then tell advertisers which key words to target, and they are buying into real account agency talent. The only thing not smart is the the price. But I'd bet 9 out 10 geeks never hearda aQuantive until today. Get outaidea your bubbles sometimes...
But I still think the online advertising market is in a hecko bubble itself, Google charting up half due to click fraud. Advertisers aren't getting their money's worth...start-ups gaming for piece of that pie, not doing the math. Crash City.
Old McBallmer had a campus
And on his campus he had some techies, ee i ee i oh!
With a bill-bill here, and a billion-billion there
And on his campus he had a search engine, ee i ee i oh!
With a bill-bill here, and a billion-billion there
MS needs to just do what it does best and stick with with Office and what it calls an operating system.
Check the pockets of those involved in the deal, I smell a couple of billions changing hands under the table.
CORRUPTION INSIDE MICROSOFT???
But, anyway, my position here was never intended to be that Google's acquisitions were financially smart.
My point was, and is, that this aQuantive acquisition is not the Microsoft I knew. And, more importantly (to me), it is not the Bill Gates I read about and, let's be honest, idolized. I can only imagine what the long-time coders toiling away within Microsoft Corp. think when they see money being spent on a scale like this. Six billion dollars represents a lot of people's raises and bonuses not happening.
I conclude from the aQuantive purchase the following things:
1) Bill Gates really has let go of the company.
2) Google really has gotten under Microsoft's skin.
3) Microsoft's stock can no longer be considered "bluechip." With Office, Vista, and so on, one might reasonably have believed that Microsoft was entering its large and "steady-as-she-goes" state...nothing spectacular, but predictable, solid earnings growth over the foreseeable short term. With the aQuantive acquisition, Microsoft has signalled that it is not willing to take, or settle for, that road. And, as a corollary, MSFT stockholders must reassess. The company's leadership is gambling. Is the gamble is on-target or not?
It's a great move.
Anything that pre-occupies MSFT, drains its cash horde, takes it into territories they have no competence in and gives them a false sense of security is great news for the rest of us!
Go Ballmer.
Apple has great ads w/chubby "suit"
representing MS OS and a young man in jeans and polo shirt, the apple OS. One shows MS guy arriving late enormously fat with garbage programs to the point he can hardly walk..characteristic of MS and its OS.
I survived installing XP Sp2 from ordered
disk after multiple attempts of downloading. They failed miserably and screwed up my computer. It took [3] Gos to install even with ordered disk.
PCWorld,in a column, said The RTM team consists
of two people[and one stuffed monkey] Vs the hundreds
[?] of programers Microsoft has employed.
"In other words, a couple of enterprising folks
have built a better, faster-evolving solution than the world's largest software company has."
Perhaps MS deserves to overpay and continue
to do a half-assed and pompous job.
The true pathos comes from the tail wagging the
dog [tail=advertising] with product/service an
after thought. What ever happened to "Profit is the
by product of service!"