So what makes for a really bad Internet acquisition? First, it has to be expensive. No one's going to rake a company over the coals over a few blown $50 million acquisitions. That might sound like a lot of money to you and me, but that's a rounding error to Google.
Second, for an acquisition to be lousy it has to contribute little or no long term growth to the acquiring company. An acquisition that doesn't fit with a company's long term strategy and that is quickly forgotten - that's a bad buy.
So, here is my highly subjective list of the 10 worst Internet acquisitions of all time:
10. Hotmail - acquired by Microsoft (MSFT) in 1998 for about $400 million. Hotmail was a second-tier free email service when Microsoft bought it and the acquisition did little to improve Microsoft's internet portal ambitions.
9. Skype - acquired by eBay (EBAY) in September 2005 for $2.6 billion. While it's early to call this one an absolute dud, eBay does not seem to have a plan - or at least a plan that would justify the acquisition price - for how to integrate Skype's calling service with the core auction business.
8. MySimon - acquired by CNET (CNET) in 1999 for $700 million. The price comparison site mySimon was supposed to launch CNET into lots of non-tech verticals - not a bad idea at the time. Unfortunately CNET had no idea how to effectively integrate mySimon and it's now withering away, surpassed by newer, shinier price comparison engines.
7. BlueMountain.com - acquired by Excite@Home in 1999. $780 million for an online greeting card site. 'Nuff said.
6. Lycos - acquired by Terra Networks for $4.6 billion in 2000. Yeah, I never heard of Terra either. The warning bells should have gone off when the deal was originally announced in May 2000 at a value of $12.5 billion, only to fall by more than 50% by the time it closed in October of that year because each company's stock price was plummeting.
5. Netscape - acquired by AOL (TWX) in 1998 for $4.2 billion. To be fair, this was a mercy acquisition. By the time AOL bought the company, Netscape had been humbled by Microsoft's free Internet Explorer browser. AOL clearly had no plans for Netscape and as a result the once pioneering company is now an afterthought.
4. GeoCities - acquired by Yahoo! (YHOO) in 1999 for $3.56 billion. When was the last time you visited a site with a geocities.com domain? I can't remember either. Shortly after the acquisition, innovation on GeoCities appears to have ground to a halt. GeoCities could have been MySpace, but the entire social networking revolution passed them right by.
3. Excite - acquired by @Home in 1999 for $6.7 billion. Remember Excite.com? Remember how it was the #2 or 3 portal for awhile? Well, a whole year and a half after the cable company @Home acquired Excite (for $394 per user!) in January 1999, the combined entity filed for bankruptcy never to be heard from again. Classically disastrous.
2. AOL - merged with TimeWarner in 2000. This one is obvious. While Time Warner finally seems to be turning things around at AOL six years after the fact, this merger was doomed from the start. Shortly after the merger AOL's business started falling apart fast, with TimeWarner holding the bag. There was never a coherent integration plan and all that talk of synergy is - thankfully - dead and gone.
1. Broadcast.com - acquired by Yahoo! in 1999 for $5 billion. Yahoo! paid a mind-boggling $710 per user back in the hey day of the bubble. But why does this rank higher than the AOL boondoggle? Two words: Mark Cuban. Yahoo's ludicrous overpayment for Broadcast.com gave Cuban the money to go out and buy the Dallas Mavericks basketball team and permanently implant himself on the American psyche. Unforgivable.
So did I miss any duds?
Next up: the 10 best Internet acquisitions. That'll be a littler harder.