I read on some other blog that if MSFT was trading at the valuation that they just priced aQuantive at, MSFT would have a Trillion Dollar Mkt. Cap!!

$6-Billion for a company that did $442MM in revs last year...? geez-luu-eez.

Someone figure out what GOOG is worth off of the AQNT-metric.

so it's "way cool" when goog pays 10x revenue and outbids everybody. After all they are smarter than other folks (why I don't know). But when msft does it, they are "lame", because they overpaid, because goog and yahoo are "too smart" to bid that much.

I don't think I said it was "way cool" when GOOG pays 10x revs for anyone. At least I don't think I did.

I think it's great Microsoft is being more aggressive, but I still think it's worth pointing out that of the Yahoo/Google/Microsoft troika the latter is the least sophisticated buyer.

Paul I expect better from this blog than posting some other blogger's back of the envelope work without vetting it.

Read the fine print:

"Yes, I understand the impression metric is a little flawed, given that Doubleclick doesn’t typically charge clients on a per impression delivered, and Right Media’s business model (according to Pat McCarthy via TechCrunch) is to “charge a fee from the RMX Direct ad networks who are bidding for a publisher/blogger’s inventory.”

"Of course, aQuantive has other businesses besides its two ad serving products (Atlas, Accipiter)"

Presumably those "other" businesses can be sold, if msft so desires, to lower the cost of this acquisition. If they keep them, then that revenue will then contribute to lowering the "flawed" cost per impression metric.

They also come with ~$250 net cash, and expected revenue of over $600m next year.

In the blogoshpere, there is something to be said for substantive posts winning out over posting time-to-market.

ps: the blog has been strangely quiet on Vista of late, given your position as the preeminent Vista Bear in the blogosphere (this is no time for modesty), and because Gates got massive attention for his Vista comments this week.

actually, GOOG already trades at nearly the exact same valuation as the AQNT-bid. hehehe-hahaha.

Yahoo made one good acquistion and that was Overture. NOw wall street wants Semel out. And I suspect he will go before end of year. The jury is still out on the goog acquisition record in advertising, given their high profile radio buy was a bust. msft has had a great m and a record in software. I don't think you've made the case.

So much for fiscal sanity in Redmond. Classic Ballmer.

Also re Google, they are at least making big bets in an area where their track record is good.

Microsoft, in contrast, appears to be throwing good money after bad--if their web success rate thus far is any indication.

Relative to core competencies, a comparable GOOG move would be paying the big bucks for an Office competitor... throwing cash at a weak flank. Something it is doubtful they would do.

And where does the Microsoft-as-value-stock crowd go from here? Face it, that thesis has just been dragged (drug?) out into the street and shot.

the obligatory "Microsoft is Dead" post arrives! But it took longer than usual. Asleep at the Keyboard?

More interesting to me: AQNT, though a great company, is not a network or a tech company for that matter. They are an interactive agency, buying media and serving impressions for their cusotmers (like MSN)and taking a fee. WPP or one of the other agency conglomerates would have been a better fit for the business, but not for liquidating shareholders. Bottom line: cash in your AQNT shares and move on.

I'm sure this has been answered somewhere, but why doesn't microsoft include an adblocker with explorer, turned on by default (say, in the next patch release)? It's pretty rare I even see an ad nowadays, unless it's served organically from the site I'm viewing.

Much more elegant solution, isn't it?

Dutch -- I'll save Vista comments for another post. I'm still unapologetically unimpressed, but I'm not calling for Microsoft to go to zero. That's someone else.

Who said anything about Microsoft being dead?

I don't think they're dead. I just think they suck.

Basically you have a company that won a huge coup decades ago, and has been coasting ever since. The whole softie-as-value stock argument is based on the idea of coasting into the sunset--a wholly rational, and profitable, thing to do.

But I'm skeptical that Ballmer etc will do that. He would rather expend tens of billions on an ego trip. Microsoft is too big and hefty to kill--or to die--but it can certainly flail around like a dyspeptic, manic-depressive gorilla for a long time to come.

Thanks Paul and Dutch for your feedback. I made some adjustments to the analysis as a result (backing out the agency and ad network businesses from the valuation - albeit with low comps), and welcome any further feedback as well. Anyone have access to a good comps database? I'd be happy to input that data as well.

Rob

http://zenrob.com/2007/05/18/microsoft-buys-aquantive-wpp-buys-247/

somebody is going to do time on this one...

Six billion dollar monkey dance.

OK, Paul, I'll agree that THIS is the sign of a market top / bubble.

I'm surprised that no one is pointing out that AQNT has profit margins of 12%.

Simply put, AQNT is mostly an ad agency. A service business. Which makes the revenue numbers even more fuzzy, and makes the multiple absolutely insane...

But hey, no one thinks Microsoft is smart anymore, do they?

We dont need another big company pushing adsense style ads anymore. We dont need another search engine. We dont need another website for anything. what we do need is LocatorEngines. who cares about adsense ads spattered anywhere available. Bottomline is it all comes down to location, location, location (premeium ad location)and some people get it and some dont. MyLocator is the King of Location.