Microsoft pays too much for aQuantive

Posted May 18th 2007 9:10AM by Douglas McIntyre
Filed under: Before the Bell, Deals, Competitive Strategy, Google (GOOG), Microsoft (MSFT), aQuantive Inc (AQNT)

Microsoft Corp. (NASDAQ: MSFT) is paying an 85% premium to buy online advertising firm aQuantive Inc. (NASDAQ: AQNT). Yes, that's 85%. It is the price for being late to the dance.

After missing out on both DoubleClick and 24/7 Real Media (NASDAQ: TFSM), Microsoft had few options left if it wanted a presence in the internet advertising brokerage business -- the intersection where markets buy ads and place them on websites. The companies in this business have huge amounts of data on internet use patterns.

So, Microsoft will pay about $6 billion for a company that had $143 million in revenue last quarter and an operating profit of $20 million. Doesn't Steve Ballmer keeps saying he won't over pay for anything? Before the DoubleClick deal with Google Inc. (NASDAQ: GOOG), aQuantive sold below $30, so the real premium can actually be viewed as well over 100%.

Being so late, and paying so much is a huge strategic blunder, but it is the price for waiting

Douglas A. McIntyre is a partner at 24/7 Wall St.

Tags: 24/7 real media, 24/7RealMedia, aqnt, aquantive, doubleclick, goog, google, microsoft, msft, Steve Ballmer, SteveBallmer, tfsm

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Reader Comments (Page 1 of 1)

6-20-2007 @ 7:09PM

Marie Anchordoguy said...

Check out the in depth story on aquantive at WashingtonCEO.com. It's a pretty interesting company.

5-20-2007 @ 12:05PM

Leslie Helm said...

The price seems high but there are a lot of potential synergies.

5-19-2007 @ 10:02AM

Sheldon L said...

Absolutely right on Doug. They should have just started accumulating stock. MSFT did not need to own it out right........would have been much cheaper.