It appears that as investors have pulled their money out of the stock market that Internet acquisitions have become popular again. We’ve been inundated with news Microsoft’s attempted purchase of Yahoo, Yahoo’s bluff, Microsoft walking away, and most recently billionaire Carl Icahn’s purchase of 50 million Yahoo shares in an attempted hostile takeover of the Yahoo board of directors. I think that Microsoft’s purchase of Yahoo is inevitable. Microsoft has made it very clear they want to win on the Internet. They have not been successful on their own and there are very few acquisitions of the magnitude sufficient to get the reach they need to succeed with their advertising platform. No acquisition is a better fit than Yahoo in helping Microsoft to win with its Internet strategy, and the value of that victory far surpasses what Microsoft will need to pay to acquire Yahoo.
Over the past day or two, several new acquisitions have been announced to help illustrate this trend; some are a lot wiser than others:
CBS has agreed to purchase CNET for about $1.8 billion cash. CNET is a top 10 US internet property with a network of computer-related sites, such as CNET, ZDNet, GameSpot, TV.com, MP3.com, News.com, Search.com, BNET, MySimon, and TechRepublic. This was a smart acquisition for CBS as they attempt to get a strong hold in the Internet, which seems to be eluding them. I can envision several ways that CBS will be able to leverage the CNET and CBS brands, such as a CNET computer cable channel and better distribution of CBS video programming online. I also drool over the portfolio of domain names that CBS is acquiring as part of this transaction, such as TV.com, Radio.com, Search.com, Community.com, News.com, Download.com, MP3.com and many others. I hope CBS employs innovative talent who can effectively leverage these assets. However, it surprises me that Yahoo was not the purchaser, as CNET appears to be a much better fit for the Yahoo model.
Comcast has agreed to purchase Plaxo, an address book and social networking site, for a purchase price estimated at $150 million to $175 million. I’m afraid this might become a “me-to” purchase that Comcast will regret, following all the hype of other social networking acquisitions. However, I could be dead wrong if Comcast figures out a way to use this acquisition as a springboard to mesh Web 2.0 with cable television.
Ask.com (owned by IAC/InterActive Corp) has agreed to purchase Lexico Publishing, the owner of Dictionary.com, Thesaurus.com and Reference.com for an undisclosed, all-cash amount. I like this acquisition which seems to be aligned with the Ask.com recent strategy to focus more on answering questions, in an effort to differentiate itself from Google and other search engines. Ask is claiming that this purchase will make it the 9th most visited property online, ahead of Facebook.
HP, the largest computer maker, is in talks to buy EDS, the IT services provider founded by Ross Perot, for $12 billion to $13 billion. This acquisition would allow HP the footing to better compete with IBM for business customers. This acquisition fits with the recent HP strategy of becoming more of a solutions provider and less of a technology provider, and is a smart diversification with the recent struggles of computer makers.
It’s interesting to see how this trend of technology acquisitions ebbs and flows. Right now it appears the money is flowing.
I would personally love to see Disney purchase the Star Wars franchise. I think Disney could develop large sections of their theme parks with Star Wars rides, develop star wars cartoons for the Disney Channel, put out Star Wars movies every few years, like the James Bond franchise. I also think Disney should purchase Build-a-Bear as a marketing channel for their stuffed animated characters, and use the Build-a-Bear virtual world as a spring board to develop a similar virtual world for Disney characters. What internet/technology/media acquisitions would you like to see?
Posted on May 15th, 2008 by Nathan Gwilliam
Filed under: Mergers & Acquisitions
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