A week or so after 24/7 RealMedia was rumored to fetch $1B from MSFT, WPP steps in and pays a modest 4% premium on TFSM’s shares and acquires it for $637M. Mind you, this comes after a considerable M&A premium run up took the stock from $8 to $12, down to $11 and change, and culminates with this sale. In fact, the $637 million purchase price translates to a per-share price of $11.75 and represents a 30% premium over 24/7’s average closing price during the last 60 days.
As per MSFT, indeed once again MSFT is the odd man out, but Fool.com has a good point. Interesting to see Fool.com echo something we encouraged MSFT to do some time ago:
Microsoft’s acquisitive emphasis at this point should be on content sites, rather than marketing enablers. Google’s success has come largely from its network of third-party sites, which rebroadcast Big G’s ads. Indeed, Google’s AdSense program contributed 37% of the company’s revenue this past quarter.
AdSense itself is practically untouchable. Because Google has the largest base of advertisers, it’s able to provide independent publishers with the best assortment of well-paying, highly targeted sponsored spots. Yahoo! has come to realize this as it struggles with its Yahoo! Publisher Network product. Microsoft will no doubt bump against the same publisher resistance once its AdCenter evolves to that point.
So the key is to own more virtual real estate in the dot-com land grab. If the site happens to be a big Google AdSense partner — like AOL or MySpace — well, that would be a bonus.
It’ll be fine, Microsoft shareholders. There are other fish in the sea. Mr. Softy just needs to realize that it’s been casting its line in the wrong pond.
Read more from our arguments here in GE Launches Media Fund, will MSFT Start to Buy Content Firms? and Is Software the New Software? Or, check out Fool.com’s article here.
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