jbs

Microsoft's aQuantive Deal: An Act of Desperation

Your 15-30 years estimate is based on AQNT's earnings as a standalone company. It is not going to be operated as a standalone company, so the 15-30 year estimate is entirely misleading.

To an outsider it is hard to understand all of the benefits MSFT will gain from this acquisition. You'd have to know more about the various operating divisions at MSFT and their plans for integration.

MSFT is betting that they can add value - that AQNT as part of MSFT will benefit both companies. You must also look at the opportunity cost. There is no doubt that MSFT paid some sort of a premium to prevent someone else from buying AQNT (and posing a threat to MSFT down the line). MSFT may have also determined that it would have cost them more than $6B to develop an in-house solution. Many factors are considered in the acquisition process.

Just because MSFT values AQNT at an 80% premium to "the market" doesn't mean that they overpaid. AQNT may be worth $6B to Microsoft. If MSFT didn't acquire AQNT, they may have ended up foregoing $6B of income over the next 10 years (because without AQNT it could be argued that they would never effectively enter the market).

Time will tell, of course, but to say MSFT "paid too much" only days after the acquisition and without complete understanding of MSFT's plans for AQNT is premature.

Did Microsoft Panic With This aQuantive Buy?

Given MSFT's lack of an acquisition track record I don't see how anyone can be too enthusiastic about this deal - except aQuantive shareholders.