Email
Password
Remember meForgot password?
    Log in with Twitter

article imageMicrosoft Pays $6 billion for aQuantive

By Chris V. Thangham     May 19, 2007 in Business
Microsoft buys aQuantive an online advertising firm for $6 billion dollars
On your favorite Web site, in your video games and on your mobile phone, digital advertising is already big and growing bigger. The complicated business of getting you to "click here" will be worth about as much this year as the state government will spend in the next two.
Microsoft is lagging behind in online advertising compared to Google and Yahoo, before they are left far behind they took preemptive measures by aQuantive for $6 Billion dollars. aQuantive is a Seattle based pioneer in next generation advertising.
It is yet to get approval from the regulators, but is should pass without any problems. This will help Microsoft generate more ad revenues via its Search engine, X-Box consoles, mobile and phone devices.
This is the largest acquisition for Microsoft so far, its previous acquisitions have been less than a $1 billion dollars.
Mark Anderson, a technology analyst in Friday Harbor said if the deal goes well between the two, one can expect more such deals from Microsoft to go after bigger deals.
"Now that Microsoft has made this step, I think it's reasonable to assume that they may do it again," he said. "That would change the nature of what Microsoft is. It would have a large impact on Seattle, I think, because it would affect Microsoft's own growth rate."
Microsoft has 76,539 employees which are far less compared to other bigger companies including Google. It will add 2,400 aQuantive employees, who work in 19 offices worldwide.
Microsoft shares dipped slightly on Friday to close at $30.83 each. Meanwhile, aQuantive stock skyrocketed almost $28, or 77.8 percent, to $63.79 a share. Microsoft is planning to pay $66.50 in cash for each aQuantive share.
For aQuantive shareholders, this will be a big windfall, many of its employees also have stocks with this $6 billion purchase, many of them will become instant millionaires.
One of the aQuantive employees, Bob Lovestedt is happy with the news, but he said it will be too early to tell how they and Microsoft will get along.
Many are questioning this Microsoft purchase, whether aQuantive is really worth $6 billion dollars. Some say Microsoft must have bought it before others like Google and Yahoo buys them. Google paid $3.1 billion for DoubleClick, an online display advertiser that runs banners on sites. Yahoo bought Right Media for $680 million in April.
Tech analyst Anderson said Microsoft, which trails both Google and Yahoo! in making money from Web searches, had to take some action or risk falling further behind.
Anderson said this purchase is the right buy for Microsoft otherwise they would have lost the online ad sales market badly. They missed out previous deals but made sure they bought this one, since; money is not a problem for Microsoft. Analysts estimate Microsoft has $28.2 billion cash reserve.
Microsoft has been investing heavily in new software and Internet services, including the popular Xbox Live online-gaming system. These initiatives are designed to be funded by advertising sales.
Microsoft’s President Andrew Johnson said more than 500 million monthly visitors browse MSN, Hotmail and other Microsoft sites and expects great potential for its ad market.
With aQuantive, Microsoft will provide “end-to-end” services to advertisers and online publishers that have advertising space to sell. Microsoft will also sell in websites it doesn’t own, it will offer a platform similar to Google AdSense.
A major Seattle area company Microsoft ends up buying another Seattle home grown company.
Anderson, the Friday Harbor analyst said it is a nice Northwest story line and aQuantive did well follow the right business path. It started of with local ventures who believed it when they started and as they grow into a bigger size, Microsoft was smart enough to buy them.
Bill Gates will be happy with this purchase; it will definitely add market value for his company. Six billion dollars is a lot of money to pay for a company whose earnings are far less. Just like other big companies who don’t want to develop in house end up buying other companies because they have money to do so. Microsoft will earn this money quickly with their PC monopoly.
More about Microsoft, Buys, Aquantive
 
Latest News
Top News