There’s been a lot of talk about the steep premium MSFT paid to acquire AQNT, and there are many reasons for that, one being that in the ad networks marketplace, it had become a seller’s market, quickly, after DCLK sold to GOOG for $3.1B.
But in light of the bidding war between MSFT and GOOG for DCLK, I’m not surprised at all that AQNT fetched that much (I own shares in AQNT). I gave my two cents as to why “AQNT is absolutely worth 2 times DCLK” here. Of course, anyone’s guess is as good as mine. Today, TheStreet.com joins the camp of supporters who are bullish on the deal.
But ultimately, I think that they paid so much because a) AQNT was the jewel in the online ad crown in its segment and b) there were other suitors. Whether Google was one of the companies, I’m not sure. If it was, it was a defensive move. And if Google was interested, then MSFT wanted to show Google that goodwill, positive press and user euphoria notwithstanding, MSFT had the financial firepower to beat Google in the one area that in some ways counts: at the cash register.
Google is making a lot of money, we’re talking $3B in profits on $10B in revenues in 2006. But it has $10B in cash, and parting with $3.1B for DCLK. Even if it wanted to buy AQNT, it could not have spent $6B out of a remaining $7B on them.
This deal, besides getting MSFT into the red-hot online advertising space in a major way puts Google on the defensive in a few ways.
This is also why, you saw yesterday talk of a Google/Salesforce partnership. In the past, I had suggested Google could launch a Salesforce killer just by bundling some of its features. But the fact that Google is partnering with CRM and not launching a competitor or buying them shows the limits of Google’s capabilities.
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